Legal Case Summary

I'm sorry, Your Honours. May I please come in? My name is Harry Kelly. I am the Council for the Appellants in this matter. Your honours, we do have, as you indicated, several different appellants before the record today and several different issues concerning them. I would like to begin my discussion this morning discussing the appeals that we filed on behalf of those parties who were dismissed below in connection with their claims about the ripeness of their claims. These parties are the Dalian and women's partnership, the Carriage House of the Skegan, Carriage House South, Thetford III, with respect to four of its properties, the Deanswood property, the Hardy Street property, Prison Court, the Holiday Town, and Thetford IV, with respect to the properties of Laundrive and Franklin Court. Your Honours, these cases, these accounts were dismissed on the grounds that they failed to demonstrate if they're taking claims for rip-throughedjudication. Now, both sides have filed motions for summary judgment on the issue of ripeness. So the issue turned out what proof each side submitted in support of its claims or an opposition to the other parties claims. What standard of review are we to apply to these ripeness determinations? It's a denotable. Aren't there underlying questions of fact? Well, there are, and they were examined by the lower court. So for that reason, I think that the lower court's analysis needs to be taken into consideration by this court in that process. There was a great deal of review and by the lower court, the lower court looked at these issues, frankly, for a couple of years before finally ruling on them. We have questions with the way in which judge damage resolved some of these issues. We think that as a legal matter, when we came forward with our proof, we offered what we considered to be admissible evidence, both for respect to the testimony of individual owners, all the owners, who had, in most instances, owned their properties for decades, and had operated their properties, and knew the markets quite well. In addition, we offered testimony from Mr. Smith, who was an expert very highly regarded in his field, who had assisted some of these opponents, some of the other plaintiffs in our case, in terms of preparing and submitting the various applications under the Preservation Statutes to the... But I guess my point is, since, and of course, the government has stood whether we should have been able to use expert testimony on a right-and-this issue, but since you did use expert testimony, if we find that was appropriate, don't we have to give some deferent to the lower court weighing of that expert testimony? Yes, Your Honor, but I think that the lower court acted in a manner which, with respect to that expert testimony, went beyond the scope of what it had the power to do in light of the evidence that was presented to it. The lower court did admit Mr. Smith's testimony as an expert. It concluded that Mr. Smith's testimony was valid as an expert based on his qualifications that we presented to the court. But then she concluded that the T-3 test was to expect this to crack. He said it was improving, Your Honor. And what we would say is that there was no doubt of air here by Judge Danichee. He basically divided up the report and said, I accept these conclusions, but I don't accept this other conclusion with respect to the way in which HUD processed these applications. I will say that Mr. Smith was intimately involved in filing of scores of applications under the preservation statutes. He knew the process very, very well. That was his chief experience with these statutes, with assisting people in making this undertaking. We presented his testimony and his qualifications with respect to that test three. We think we grounded him very, very clearly on the nature of what he had done. But the government offered no contract-rooting testimony. They didn't bring in their own expert. They made a number of allegations with respect to Mr. Smith. But they never attacked on a substantive basis the conclusions that Mr. Smith reached in that test three. So I think that the answer is that the court has to weigh the testimony, obviously, of an expert in use, make the best use of it. But for the judge, for Judge Danichee to conclude the test three was on proven and that was his language. Without conducting a doctor here and we think went beyond his powers. Please turn to the issues, the major issues of law. Well, as you said, when we were presenting these issues to the global court beginning with the right to this issue, we presented testimony from Mr. Smith that we just discussed. We also presented the testimony of our individual owners based on their many years of experience. None of the oldest testimony was contract-rooted. We presented declarations with the position of the testimony

. And we believe that that testimony was correct when Judge Danichee looked at it the first time he concluded that it was not- But we're talking about right then. Judge Newman asked you to move on to some of the other issues? Well, in terms of weighing the evidence and so on, of course, we appreciate that this is significant. But we need first across the threshold question of the issues of law. Thank you. What I would say is that when- This is the group that we've been talking about, this is a panel that I just mentioned. These are the parties who actually appeal to this court on the issue of rightfulness. There are other appellants who did not appeal because they prevailed on the issue of rightfulness. We don't think those issues are properly before the court today because the government is not to begin with the not-final across appeal, which the courts rules require. The cross appeal rule is- It's pretty specific. It says you have to file a cross appeal if you want to change the judgment. Wouldn't the government alternative arguments leave the judgment of dismissal in place? Well, I think what the court has said here looking at the Luzar decision is that when a party has lost an argument and has not appealed it, where the result of acceptance of the argument would be reversal of modification of the judgment rather than affluence, the judgment with respect to rightfulness is that the claims of the bifurus and the other claims of Petra III and Petra Torre that would not put on appeal, so those parties claims were right. But those parties claims were all rejected either on collateral, a stop-al or the right to prepay argument. And so the judgment isn't a judgment on rightness. Rightness is an issue. That's not a judgment. The judgment is the dismissal and on the dismissal, I would have rejected the government's briefs as of cross appeal here, had they filed it and insisted that they don't get a yellow brief and a rebuttal brief, so they have to go back because they would not affect the judgment. So why don't you address the issue directly if you're so inclined? I'm very inclined to do that, Tron, because I think on the merit these people, these plaintiffs claims clearly were right. When we were before the court the last time, the court... We appreciate their right, but we still have to cross the substantive threshold of the right to prepay. We have a very contractual arrangements in relationship to the regulations. Thank you, Ron. There were four repellents that had to address the right to prepay and were filed on this grounds. Those were by a forest, the Dalian, the women of partnership. The Fetred Free, the women of partnership with respect to the market, Northern Holiday Town, and the Fetred Free, with respect to respect to the pre-trip. The issue here obviously, the government has raised it, did these parties have a right to prepay their mortgages. Our next argument, the government's argument is revisionist history of the worst sort, because the government is saying to the court directly the opposite of what it said internally during the relevant time period and to the public. We respect the rights of these no-charries. The court worked on regulations that issue expressly amendable. They were amendable, you know, and I'm not saying they never were amended. And we believe that the proper way to look at those regulations is that the notes that our party is sensitive into, derived from what the regulation said at the beginning of the program and continued to be in effect during the relevant time period. But if we accept your argument, I mean, you can see that the notes themselves and even the youth agreement with the government does not have any reference to a right to prepare. It doesn't, Your Honor, but I think that the important thing to understand. Actually, to be clear, you said it doesn't. It does. It says you do not have the right to prepay, right? You may not prepay. We do not disagree with the language of the note that you just read. But what I would say is this, and I think it's important distinction to bear in mind. If you look at the regulatory system that was established by HUD and by that regulation that was in place under which these notes are written, it created two alternatives. If you are a limited dividend entity and all of these opponents always plan to score a limited dividend entity. And you waited 20 years to prepay after the final enforcement date. And you were receiving rent supplement payments, you couldn't prepay. If you were not receiving those rent supplement payments and you were a limited dividend entity and you waited 20 years, you could prepay. There were two alternatives and only two alternatives created by HUD scheme. And HUD drafted these notes. There was not a third alternative. It was impossible

. We said HUD drafted these notes. HUD didn't draft the mortgage notes. You and the mortgage lender drafted the mortgage notes for your client, right? They were in the forms of supplied by HUD. These were HUD documents. HUD's not a party to those notes. I have not a party to the note but it did sign the final enforcement agreement. Right, agreeing to provide the insurance. That's right. So I'm confused. You and the lender signed a note that said no right to prepay whenever. Despite the fact that there was a regulation that would have allowed you to create a mortgage that could be approved by HUD, that would allow for prepayment at 20 years. Right? This was the form that we did not create this form at the time the parties entered into it. This was not a form that the parties themselves drafted. There are other plaintiffs in here who had the right to prepayment in their mortgage notes. And so you could have done that all the time. I'll acknowledge, this is the form that was given to the parties to sign. There are several different variations of the notes over time that have been used. We're sanctioned by HUD. In fact, except for three, which is the same party, had some notes at the same time that had a right to prepay and some notes at the same time that didn't have a right to prepay expressly in the note. So it's not as though you could claim that they weren't on notice that a note could be written that included a prepayment option because that single party had notes going both ways for various properties that it owned. True, Your Honor, but I think it's also clear that under the regulations that those notes were issued under, the parties knew that the regulations wrote and the regulations wrote as written simply stated that if you were receiving rent supplement payments, you couldn't prepay. And if you weren't receiving rent supplement payments, you could repay. But under your argument, if we took it to a logical extreme, wouldn't it be true that any time of a private party entering into a business relationship in reliance on what regulations said could then argue this kind of taking every time the regulations were changed? Well, what is the clear on the regulations here? We're not changed. Well, the statutes were issues that overrode those regulations, right? That's the nature of the taking that occurred, Your Honor. But what we're saying is that when the biophoresis into their notes at a very early point, they knew what the regulations said. They knew the regulations said that if they were not receiving rent supplement payments, they were eligible to prepay. No, wait, no, this is the party. Don't understand. You keep saying that the regulations gave them a right to prepay and somehow that trumps the contract. I don't know where you got that from because the regulations that I'm reading 221.524, which does outline instances in which prepayment is possible, is under the heading eligible mortgages. And there are lots of different provisions like the one right after 221.524 says the mortgage may contain a late fee clause. So each of these provisions in this regulatory framework are things that the mortgage note is allowed to contain that would otherwise still make it eligible under the HUD program. It doesn't mean the mortgage has to. For example, more so than half to half, it says may contain a late fee clause. So HUD could approve a mortgage and it could satisfy HUD whether it had a late fee clause or didn't have a late fee clause. Why wouldn't I read the prepayment privileges section the same way? HUD is willing to approve mortgages that have prepayment clauses, as long as they need certain conditions. HUD is also willing to approve mortgages that have a no prepayment clause, but they're only going to approve the prepayment clauses if they meet the conditions articulated in 221.524. So why since the entire regulation is set out, listing the options that could be included in the contract, am I suddenly going to say every one of these options automatically has to apply to every contract? As I read this regulation here on what it's saying is that if you are an eligible contract, if you are coming into the program, the program will permit you to prepay without HUD consent if those three conditions in 524A are satisfied. Why? I don't understand why you read it that way as opposed to this is one of the conditions that is allowed to be written into eligible mortgages since every other condition surrounding it is such a condition. What I say is you're on it. If you look at what HUD said about this consistently over history, they agree with my interpretation. Well, that's important because certainly if the agency has expressed an interpretation of its own regulations, that interpretation is entitled to different. So where is it that the agency has interpreted this regulation as giving you a right to prepay even when you're mortgaged set to the contrary? Well, we would cite you back to two release resources of is the preamble from the 1991 libra regulations. Tell me where in the appendix I could find that or specifically because I thought you might point me to the proposed rule in the federal register. Yes, you're starting with a different place

. So I don't have that one handy. No, that was the 1991 proposed rule. Well, that is what you're starting me with. Yes, you're right. Okay, I have that handy chair. And what we put in the language and I've read from what says there is that HUD was specifically aware at the time that it put out this regulation in 1991 that there was various and conflicting languages in the notes that it said in some instances, the notes actually say that you may repay without HUD consent and HUD at that time. That's not true. If the notes that you may prepare without our consent, we're not going to read the notes that way. Okay, now, if I agree with you and I think you have a strong case on what is actually written in 56 federal register 202-262 about what HUD is saying here, but an era statement made in a proposed rule that was never I can't figure out I couldn't figure out but I can't tell whether the rule was ever even adopted. And I know who what the actual rule was and we've done some looking. But so is that tantamount to HUD's definitive interpretation of this regulation such that that statement ought to be thought through position by the government, which is therefore entitled to defer? I believe it is your honor because HUD came back to that office of general counsel came back to the side of that provision several years later in the 1995 memorandum from the general counsel, which we've also provided before. It said the preamble and interim rules for Leclerc. Can you direct me in the J.A. to exactly where the general counsel is? I believe it's in J.A. I have a set for one handy. I only brought one because there's so much overlapping. And I think I have to buy a for reference here, which is 0.97 if I'm not mistaken. I think J.A. 95, my law purpose told me. Is that right, Cassius? 95? All right. Okay. Here's, this is, I got the opinion now. And in the 90. You're Mr. Price. This is the one. You're Mr. Price May 1st, 1995. I believe that's right. And there's an earlier one in 92 as well. But if I may, I think the 92 one is actually more specific and more useful here because. So J.A. 92 to 94. Okay. 90, J.A. 92 is the July 17, 1992 one. We will opinion. And that was wrestling with the specific question that these particular opponents face. Because these are these opponents began with a rent supplement contract. That was the, the, the, the, the, the, the, the, the applied, before the Section of Programs adopted. HUD persuaded the biophores and the other parties to terminate the rent supplement contract in the end of the Section 8 contract. And at that time, the General Counsel specifically addressed the situation that these particular plaintiffs faced

. Where rent supplement owner converted Section 8 assistance. And the court said, and I'm sorry, the Office of General Counsel said, if the rent supplement is converted Section 8 assistance, the project would no longer be considered a rent supplement project. Would no longer be considered a rent supplement contract. In other words, it was moving from that first basket that I just wrote a few moments ago to the other basket. And would not be subject to the prepayment prohibitions in Section 2215 24 into 3630. Rather, a limited dividend distribution mortgage or which is not receiving rent supplement assistance would be permitted to prepay its mortgage without a consent after 20 years of the data file endorsement. So I think the 92 General Counsel member, random, is saying make the distinction that I may. If you were not receiving rent supplement, you moved from the basket of people who could have prepay to the basket of those who could. And there was no third alternative. Okay. So I completely understand your argument now. And I think it's a very good argument. The one question I have for you is how does this regulatory is stowed benefit the right to prepay which you expressly don't have in your contract? Your contractual rights has no prepayment. So the federal government has come along in whatever benevolence it has and decided to nonetheless allow you under certain limited circumstances to go ahead and prepay. How does that turn into a contractual right that you have a vested property right? Because I think what, especially the General Counsel's office was saying in 1992 is not that we're conferring something new on people. This is a right that was latent from the moment that they entered into these contractual arrangements. The regulatory system that was set up by HUD and under which these notes were derived and executed by HUD when it finally endorsed them. That system allowed for only the two options that were approved. But I thought that can't be right because all these contracts expressly say to the contrary and they were contemporaneous. So these contracts were under this scheme and yet HUD, you said provided you with the clauses for the contracts and the HUD clauses said no prepayment. So it can't be the case that HUD had as an agency decided there were only two instances prepay under these conditions or prepay under these conditions. Because they were providing you with contracts that said no prepayment. So it can't be a reasonable interpretation that they believe prepayment could never be prohibited. Well, but that's what these excerpts that we've located and we asked the government to provide us with evidence or documents discussing this right. And we found these materials and what these materials you uniformly said. And it's manifest that when HUD was looking at these issues, they were looking at the contracts. They were trying to figure out what the rights of these people were and they were not saying that we are giving these people something different than what they had at the beginning. In 1992, the Office of General Counsel made it very clear we are confirming what the rights of these parties are pursuant to these notes. And if the note doesn't conform to what we established, the note must yield to the interpretation which we are providing to you today. And I think the best evidence of this is given in the biofores. Well, but I'm having trouble with that impression of yours that I don't understand HUD to be rendering an interpretation of what you meant at J.A. 190 when you said the note may never be prepaid and you signed that document. I understand them to be saying as they did in the federal register site you pointed me to, if there is a conflict between the note and the reg, the reg will supersede the prepayment prohibition and the mortgage note. So they acknowledge that the contractual right has a prohibition and they are saying the regulation is going to supersede it. The word supersede means come after, right? I mean it has a natural meaning in the English language. So if they are saying, they are not saying I'm interpreting the contract is never having allowed it. They are saying we are going to replace that term and have you instead followed the regulation which gives you a benefit that you didn't previously have. Well, I think that if you put the various statements that the agency has made together, I read the agency as in fact saying that if you look at the system that was put in place, these notes don't exist independently. They came from the program that was established, the 220-win program, the Section 230's program, to carry out a mission. How it created, how it took the statute of the depower, drafted regulations to put into effect and then issued regulatory agreements and the formal notes in order to carry out its mission by obtaining the participation. I think that this is another direction. I don't think that anybody has argued that HUD could not enact a regulation which somehow affected or changed the contractual relationships, the fall of the fall of the lender and the end-hut. The question, the legal question, isn't it? Whether in so doing, this was a taking of a right which had been previously vested. As to how it was previously vested, we can consider. But if in fact it was previously vested, we agree that I could say no you can't do it. Was this a taking or not? Isn't that what this case is about? Yes, that's right. In our view is that when they entered into these notes, all of the amounts entered into these notes with the understanding that when so long as they were receiving supplement payments, they could not exercise a right to prepare

. They didn't have that right. I thought the extremely complex question is you and Judge Moore have been discussing is whether in fact a right was previously invested between the various contracts and regulations and whether a regulation can override a contract in order to divest a right previously vested. As I said, I think that our view is not that something new was created in 1991 when the lipper regulation came out or in 1992 or in 1995 when the Office of General Counsel explained what was happening. What in 1992 the Office of General Counsel did was essentially to say that for those people like these opponents who were persuaded to leave their own supplement program and come into the Section 8 program, what happened at that point was that they were able to move from the basket of people who at the time, at the beginning of this program, were not allowed to free pay into the basket of those who were. That right was latent at any point for anybody. So long as they weren't receiving the right supplement payments, they were eligible to pay. I don't think anyone debate that these property owners were sort of sandbags by the government a little bit. The government encouraged them, the government told them they were going to be able to do this. But the question is, does that become a contractual right? Did those regulations create a contract between you and the government or is it a contract between you and the note holder that is abrogated? That's the difficulty here because they can have regulations that induce you to do certain things and then ultimately change those regulations or Congress can by statute override those regulations. And I think that the answer is, that when the program was founded, this right was built into all of the notes that were issued by HUD. What HUD was saying in 1992 and 1995 when it looked at this is that everybody in this program had a right to free pay after 20 years without a consent. If they were a limited dividend mortgage or and we're not receiving that supplement payment. So who is the contract with? Well, the actual terms of, I think that this court was seeing in your garden's case originally said that the contract was between the mortgage and the mortgage or HUD endorsed that. So the contractual agreement was between those parties. But as I said, these notes were prepared by HUD. They were the offspring of HUD. And HUD is the party who is clearly in the best position in terms of being able to say what the rights were that these notes conferred at the time they were created. Can I ask you something about the general counsel's opinion in particular. The one that you're citing to us that you're saying establishes unequivocally the belief that there was an overriding, contractual right to free pay sort of throughout. The paragraph you read to us at the bottom of 93, the very end of that paragraph continues and says, liffer requires in order for housing to be deemed eligible to income. There must not only be the right to free pay without HUD's consent, but this right must have existed by regulation or contract which was in effect prior to February 5th of 1988. So isn't this general counsel's opinion actually recognizing that you don't automatically have a right that the right has to have existed in the contract itself for it to arise? I have always said that language learners confirming our position because our position is that this is a latent right that was built in to all of the contracts. And what HUD was doing these later. Then why did you sign a contract and said expressly the opposite? Because that was the one that was provided to us at the time. If you look at the there are many other, obviously many other plaintiffs in the N.I. and Gardens case now below. Many of them have language that follows tracks very closely this particular regulation. This one does not admit that. But it would be very difficult for me to understand the situation where these contracts that were signed pursuant to the same program under the same regulations that offered exactly the same set of rights and benefits by participating in the Section 221 or Section 236 program would be deemed somehow truncated right that everybody else participated in the program had pursuant to the terms of the regulations that led to the drafting of the regulations. And I would say that this is a very important thing to do with these notes because then you end up with parties who are like everybody else, except for the fact that the time they entered into this contract at the very early point. They were receiving rent supplement assistance of those contracts and ended in notes that so long as you're getting the assistance, you can't pre-pay. It is the language of the 1995 letter at J-97 stronger than the language of the 1992 letter. I'm not sure why you believe the 92 letter is more powerful for you. Well, I'll accept the court's view of which is more persuasive. I simply think that the 92 document is useful because of the dressing in the particular situation that we're facing here. The other number 91 statement is extremely broad. And it says, if a note says that you can prepare without our consent, you can't pre-pay. It also says that you can't pre-pay because, you know, it's a factor right because of the time you were getting rent supplement assistance. If it says you can't pre-pay and you're not receiving that rentable assistance, you can pre-pay. Do you agree? I'm just trying to understand how your argument is founded. I mean, we're having this argument about whether there was a contractual right because I think that we're all probably on the same page, but I want to make sure that if the government simply bestows a right by regulation and then changes the regulation and takes it the right away, that that isn't in the circumstance of taking. I mean, if you didn't have a right, you unequivocally had no right to something and the government comes along and creates a right to say welfare. You are not a welfare recipient. You've never been a welfare recipient, but there's a welfare program that you could be eligible for that would otherwise exist. The government has bestowed it as a benefit on people, and then the government by regulation takes the program away. Suddenly, you're in a situation where you would have benefited from that program to continue to exist. You don't have a vested property right under that circumstance to claim the government didn't have the right to take that program away, right? You agree

. So we're in agreement that if the government be so deregulation, the government changes that regulation. That doesn't give you a basis for a taking. The branch and the white case address those things. You would agree with that, right? That's right, Jonathan. I understand your arguments. I just want to make sure that we're all talking about the same thing. That's right. That's why the contract portion is so important to you. Why it's a contract? Exactly. We think that that contract stems from the regulation. That contract embodied those rights in a latent manner to come back later. There are several other issues that need to be discussed, such as the issue of inclusion matter, with respect to the Fed for four. It was my understanding that court was going to allocate certain time to on a case by case basis certain property specific matters. I was planning to discuss that during those sessions, but if you'd like me to get into the issue of inclusion matter. I think we appreciate that this fundamental question, depending on how it's answered, will affect all of the other issues. No. The issue of inclusion matter only. Your Honor, only addresses the Fed for four because it alone was the sole party to a prior litigation. Right to prepay only addresses some and collateral stop all the addresses others. In fact, the only one that is in both is Stuart's Creek one. I have a candy candy chart. My law is prepared. It is property by property, issue by issue. I think we should all compare our charts, Your Honor, but I think we've all got the similar charts like that. But the issue of inclusion case applies to all the Fed for four. Do all the Fed for four because all of the Fed for was the party. But interestingly, and this is the part that surprised me, and my wrong about that, the earlier court circuit case only Southgate. So of the one, two, three, four, five, six, seven, eight, nine, ten, eleven separate properties that composed set for four. With eleven separate mortgages and eleven separate sets of circumstances, only one of them Southgate was that issue in the four circuit decision. And I'll be right about that factually. I believe that is correct, Your Honor. I think that that was the only one that was there. So that how can collateral stop will apply when our court has clearly indicated that every one of these things has to be taken case by case because the circumstances of a mortgage can be different. The circumstances of the geography where the property is located can be different. Your future plans for the property can be different. So when our court has said that every one of these has to be done case by case, how can collateral stop will which didn't address all but one of the properties for four circuit opinion? How can that be resolving the same issue? That's our problem as well, Your Honor. Because the rules are that for collateral stop will apply. The legal and factual issues must be identical and they are not. There's no overlap with the court indicated. Is there some tension here between the arguments that you make on the statute of limitations issue? It's doing that we get to it. The argument that you're making here under the statute of limitations issue, you argue that the fact that there are different properties doesn't really matter because it's really, you know, a centralized question that relates to the petitioner or the plaintiff. I think what we said with respect to the central limitations issue is that in all circumstances the federal plaintiffs were alleging the same basic injury that they're taking and a pursuit of the statute. So on the one hand, the basic claim is the same for all of those properties, but the proof of how that taking arises and the evidence that is necessary to demonstrate is extremely fact specific. As the court has I think indicated on numerous occasions any regulatory taking claims of very ad hoc factual discussion. So we think under rule 50 and C it's very clear that those claims with respect to the federal properties that were brought in at a specifically amended later. Clearly, I'm excused. Clearly relate back to the original complaint because that complaint laid out the nature of the allegations that were being made and the impact that this statute had on this plaintiff, or the plaintiff. And that effort is one of the three and that before I believe in the only two plaintiffs from the early from the lower case that had multiple properties

. Okay. And then in the fourth circuit, your challenge there was an as applied to, I mean, not a facial challenge as opposed to an as applied fact. Exactly. The correct way around it. The cases were very different. In the federal for case, which was decided in 1990, it was a direct attack on due process attack on the lipa at the time. Libra had not been enacted at the time of the federal court decision. So the only challenge that we could make was with respect to the ellipis statute. And it was simply a broad facial attack on that, whereas pursuant to what the court told us to do when the issue to decision of this case in 2006. The issues now for the lower court are as applied regulatory takings claims, which are fraught with numerous factual and property specific issues that are necessary in order to show that kind of a thing. And I know I'm moving backwards here, speaking of things that court sort of told you how to do. I try to understand why Mr. Smith did not use the analysis that was sort of endorsed in Tiana Gattu for his rightness. In other words, he won in T2 analyses. Don't seem to mirror the statutory requirement as tightly as we contemplated in Tiana Gattu. We thought, you're on that when we looked at the approach that Mr. Smith was taking, it had a very strong mathematical objective measures of what using the methodology that had itself it developed to determine who could and who could not prepare. I don't think there's any one way to do this. I do think it's interesting. I think in his original, I'm sorry, in the motion of the order on reconsideration, I believe that Judge Damage said that he felt that Mr. Smith had provided information that was akin to or similar to him in respect, the information that had been brought forward in the seating of Gardens case. And the methodologies that he used gave us a degree of mathematical precision. You were either in or you were out according to Mr. Smith's analysis. And all of this just so that I understand is going only to the administrative exhaustion point, right? The Smith one and two and the validity thereof is simply going to whether or not you should have had to play this out before HUD, before coming to district court after being rejected or prepayment or whether you should be allowed to go straight to district court. Am I right? That's right. This isn't on the merits of whether you have satisfied a taking. No, no. Simply on whether or not you have a right to get your foot into the courtroom at this point. That's exactly right, Your Honor. It's one makes you understand the context. Certainly. This is a case that's been obviously taken sometimes to get to the decision we are now proceeding. We're taking discovery for a group of plaintiffs in the lower court. But all of this was in order to do what the court asked us to do to come forward with fact-based property specific detailed information explaining why these plaintiffs could not satisfy the very strict standards for the statute provided as the court said in the scene. If you don't satisfy those mathematical requirements, you cannot. HUD cannot allow prepayment. And what Mr. Smith's test did. We felt was test one test two was to allow the court to assess on a very detailed and methodologically correct basis. Whether those properties could in fact repay their work. So your point is that what we said in get a good two is that you have to prove certain things and you're just saying that we didn't stick to a methodology for those. I think that's what very correct, very true your honor as a judge damage felt that Mr. Smith had come up with the test one that was very strikingly can. I think it's a language to what wasn't seen. But I would also say that I don't think the proceeding of court established or limited the specific nature of the proof that the party need to come forward with in order to satisfy those standards. Your last issue is that limitations. I know you addressed that to some extent already

. But aside from your cross appeal argument. How do we is there any difference that we are to give to a lower court determination of relations back or is this a purely legal and no? I believe that this kind of a decision because of the book. I still think that the court this is clearly reviewable of the court. But the fact findings that the specific facts that were found by the court in support of the statute of limitations is a jurisdiction issue in the court of federal claims are minus standing are reviewable and clear error and judge judge damage did find. I'm sorry. It was really just we need at the time. It did make a certain number of very specific findings found that that for three had been plaintiffs since 1993 that that for three certain regulatory taking claims for their properties based on lip or at the time. No new claims or theories of liabilities were added by the inclusion of the additional properties. And the amendment only identified all the three properties encompassed by the existing regulatory taking claim. I see what I'm already on my. Let's hear from the government on these issues and we can go back to the particulars as appropriate. Thank you. Thank you. It's a guarantee. May I please the court before the court are as applied regulatory taking claims brought by the owners of 21 moderate and low income housing projects. The owners alleged that libra affected the taking of a contract right to prepay their mortgages with a private lender. Two owners, Carichasse South and Carichasse Muskegan also alleged that a libra affected such a taking. Now these claims fail for several reasons. First and foremost, the taking claim of all of the plaintiffs as to all their properties are not right. In addition, the mortgage notes for six particular properties do not contain the contract right that was allegedly taken by the United States. Issue of inclusion bars the claims are started by setford for as to their properties and claims about ten properties owned by setford three and setford four are barred by the statute of limitations or at least they would be barred by the statute of limitations if those claims were right. Can we start with issues for accruing? Gladly. Because I think this is one that we can dig into quickly. Isn't there a distinction between an as applied challenge and facial challenge? In the taking context there certainly is. So in this particular case what the fourth circuit considered is whether there was any possibility that any property could ever qualify. And they said that the kit proved futility because we can't say as a matter of law that that's the case. But they didn't decide that these particular plaintiffs would never be able to make an adequate challenge. I don't think that's by right. The setford four decision was it was not a taking case. It was a due process challenge. And the plaintiffs said we don't need to go to HUD to assert a due process challenge as to us. It wasn't simply everybody it was as to them. Well, of course you have to say that as to me but their argument as to why that was so was because they said because no one could ever qualify. No, they didn't say that no one could ever qualify. If you look at the decision they say that we couldn't have qualified. And that's what the court talks about. The court talks about it. They raised four different arguments as to due process as to why the district courts dismissal of their two process claims were improper. One of them is that you don't have to exhaust administrative remedies when you're making a constitutional challenge. One of them was that you don't have to exhaust administrative remedies because as to us, exhausting administrative remedies would be futile. The fourth circuit. Why? I didn't see them making the arguments that they make here at all about futility. So how, I mean the fourth circuit you can recognize you're completely unsubstantiated, generalized argument about futility isn't going to ever cross the hurdle. So what I don't understand them having made the argument before the fourth circuit because they're making here today which is these precise properties would never have been approved for prepayment by HUD on the basis of their historic record of refusing to prepay because the only properties at issue in the collateral stop all are all ones that satisfy Smith one or two. These are not ones that hinge on just Smith three which judge damage found valid one or two. So I understand them saying these properties are properties which we can establish legitimately, I know you don't agree with that, but legitimately can establish our entitled would never be approved by HUD and therefore it will be futile. I don't understand that to be the argument that they made in the fourth circuit. I've looked at all the briefings all the way back to the district court

. That's not the argument they made there. Well, I think you need to go back to and we're now getting into futility honestly, your honor and what is standard for addressing futility? Well, we're getting into futility because you've prevailed on collateral stop all in the collateral stop all with space entirely on futility. It seems that we have to actually since collateral stop all requires that the identical issue having been resolved below, you have to look at what was the issue that was in fact resolved below, right? And the issue as that was resolved below in set for four was did the property owned by that before they were dealing with a specific property. They were dealing with Southgate as one of your honors mentioned during Mr. Kelly's argument. They were specifically focusing. That was that was the claim that that was the property that set for four put forth in that litigation. So I'm going to ask you two questions. Sorry to interrupt you. But since none of the other properties at issue in this litigation, what even add issue in the fourth circuit decision, how the heck can we have collateral stop all because we've made it clear, you've got to have property specific case by case, mortgage analysis. So for everything other than Southgate, how could we conclude that a decision rendered in the fourth circuit about what might have been futile with regard to Southgate? Was or wasn't futile with regard to all of the properties not considered in that decision? How could that create collateral stop all? I think that it doesn't create collateral stop all your honor because what you have to address in looking at exhaustion is whether or not the fundamental question is not whether or not as to a particular property, would or would not approve a propanement. The fundamental question is could have approved payment if the administrative process had been exhausted. So if looking at the possibility, what might have happened as opposed to prediction as to what the plaintiff or what the court thinks would have had? So if you assume that the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the plaintiff or the The plaintiff or the plaintiff or the plaintiff or the plaintiff or whether he had a independent course at the time to pay the bank contract try to stop to pay the выс Thanks Mr. Speaker for us We could offer this Mr. Speaker please, Mr. Speaker agree Please please please as you spend the 취程 and public fees that are being said advance by then for the strategic to inform security reasons We could provide a resolution not to withdraw the plaintiff or pork The law and muchaser as opposed toFOC will of health utility. And so if your argument were right, we couldn't have a health utility in those cases and allow those cases. I think you're talking principally about what we've referred to as the Sianic-2 decision year. But you also have to recognize the green-ribe decision in an earlier case in which the court held exactly that. But they're both our job because those are both panel decisions to attempt to reconcile the situation. And if you're arguing that you can never show futility, then you're actually saying that the Sianic-2 just got it wrong, right? You're on a...that is not my argument. I think that what Sianic-2 did was the same thing that the Supreme Court did in its pseudom decision. It said that based on what happened in this case, there is no dispute as to four model plaintiffs and only as to four model plaintiffs. There were more than 40 plaintiffs in the case. As to the four, it may have been 38. But there were...as to those four model plaintiffs, there's no dispute that HUD would not have allowed them to free-pack. Right. And we allowed all the other plaintiffs to go back and to establish the levels of proof that might be necessary for them to prove the same thing. The court allowed them to go back. That is correct. It's also important to recognize what this court did though in the prior decision in this case and how the court handled Sianic-2 and how the court handled Greenbrier in the decision in this case. The prior Anaheim Gardens decision, the court looked at the proceedings. It was analyzing this case as a motion to dismiss under Rho 12b6. And it found in the pleadings allegations of administrative delay. It said at page 1315 of that decision that unlike the plaintiffs in Greenbrier, the plaintiffs have said that they applied for relief under LEPRAP, but that HUD has so severely delayed in meeting its requisite deadlines under the statute that they have as a result missed their own statutory deadlines. It said that a plaintiff claimed that it filed a notice of intent and should have received a preservation capital needs assessment within a certain period of time and mentioned other allegations of administrative delay. And then this is key. It said because a taking claim based on administrative delay could be right without final decisions from HUD on prepayment, the court reversed and remanded it. It said we reverse and ran for the development facts on whether a policy taking claims are right. That's at 1317. And I think what the exact language for you said because a pelt have begun the application process, but have run into delays or are missing information on the value of their project because of HUD delays or refusal to provide the requisite appraisals and PCNAs, their claims if proven may fall into the administrative utility category and be right without final decisions. I think I'm not really understanding your argument

. I understand what you're saying, but I'm not understanding how it's responsive to whether or not today can argue before us futility which wasn't decided by the fourth circuit, which is the collateral of stoppage points. So tell me how the argument you just made about whether there could ever be a temporary taking by virtue of administrative delay, which I consider quite frankly to be a separate and unrelated point. Tell me how you're justifying the collateral stoppage holding by the fourth, in this case, these would be the fourth circuit on the basis of that language about a temporary taking claim. We've it together, so we're not getting it. And I was talking about futility generally around or not so much collateral stoppage, but my understanding of the fourth circuit's decision is that the fourth circuit said as a general rule where there is a discretionary administrative process as here that exhaustion of that administrative process is required. And exhaustion of the administrative process as to theft or for will not be excused because of futility. That's my understanding of what the fourth circuit did in theft or for. They said that the failure to exhaust. If that's how broad the holding was, then that would be inconsistent with the anarchist who had anti-Hankardons. Would it not? No, it is not. It is not admit. It is not inconsistent with the anarchist who, because the anarchist who, as to the model plaintiffs, simply applied the bedrock proposition is if there's no dispute between the parties. And the United States did not argue that the fact established at a prior breach of contract trial meant that there was a possibility of repainment. We did not claim that there was a possibility of repainment as to the form model plaintiffs. It was an undisputed proposition as to form model plaintiffs that they couldn't repain in the case of. Suppose that HUD has discretion to grant prepayment and that a thousand different people have applied with identical circumstances. And HUD has denied every single one of them consistently the right to prepayment, even though they could have within their discretion allowed prepayment in those instances, but HUD has really pretty clearly and categorically rejected prepayment under their discretion for people who have certain types of criteria. So now the thousand and one person comes along with the identical facts. This is not our case. Don't worry. I'm not trying to understand what it is. But the thousand and one person comes along. Technically, HUD does have the discretion. It would be awfully hard. It seems to me for them to grant that discretion in light of number one thousand and one given that they rejected it for the first thousand. But theoretically, they have the discretion. Is that a circumstance in which futility could ever exist to allow the thousand and one person to give the administrative process and go straight to district court or would your position, which seems to be, whenever there is discretion, you can never have futility. Your position would seem at its no furthest point to trump futility even in that clear case. So I want to know where exactly you are. Your honor, our position is that you would have to exhaust there. And I would point you to the Corus Stahl decision of this court. It wasn't quite as extreme as the hypothetical you just gave me. But in Corus Stahl, this court rejected the argument that an agency's position in other matters establishes futility. And it said that. It said, if you are seeking relief and this applies to you, you have to go and you have to convince the agencies that they've done it wrong in the other cases. As I said, it's not as extreme as the hypothetical you gave me. But it did talk about rejecting futility in the case where a plaintiff argued that the agency's position in other matters showed that they couldn't prevail in that case. And the court said, no, you must exhaust. How do you resolve, how do you deal with the fact that there is some inconsistency between the arguments that you're making on the statute of limitations and the arguments that you're making here with respect to issue profusion because you responded to Judge Moreen said, it doesn't matter that all those properties weren't before the fourth circuit because it's just really one big issue and it's all the same. And with respect to statute limitations, you're saying, well, it's not really one big issue. We need every set of property has to satisfy the statute of limitations. Well, as to the statute of limitations, Your Honor, we're talking about rightness here. As to the statute of limitations, you're looking about the underlying transaction and you really are getting into a merit sort of analysis, which is somewhat different than what we're talking about purely on the rightness issue. The terms of rule 15C of the Court of Federal Planes ask whether or not the same transaction or occurrence, I'm paraphrasing the language, but whether the same transaction and occurrence are at issue in all of the claims. And when you look at that and you look at the merits of these claims, not whether or not the claims are right, the rightness aspect of it is very similar. Because you do have to apply to pre-pay. But the merits of the claims, when you start looking at the pencentral factors and you start looking at economic impact, you start looking at investment, best expectations, those things are all very different. Because you are dealing with different properties, you are dealing with different town and cities, you are dealing with properties that were developed at different times with distinct mortgages and with their own preservation history. Although frankly, the preservation history is similar in that none of the plaintiffs here did see code permission to pre-pay. So that aspect at least is similar. They went different routes as far as seeking benefits under the statute, which virtually all of them did see kind of the statute. With respect, you didn't eagreze any of these issues to the red briefs. So obviously we didn't know if that's limitations or the attack on key one and two or even other issues. So what is your response to the argument with respect to the fact that you should have cross appeal? Well, as to the cross appeal, Your Honor, it is exactly what was discussed earlier. This court has said that it's improper for the United States to file a cross appeal where we are not seeking to change the judgment. The judgment here as to all of these plaintiffs that are before the court today is a judgment of dismissal. And we are simply providing alternative grounds for affirming that dismissal. This is how you say that none of these plaintiffs in any of these cases sought permission to pre-pay. That's correct, Your Honor. Not a single one. Okay. So as to your cross appeal, your question, Your Honor, the law on the circuit is clear about when a cross appeal is appropriate and frankly when a cross appeal is not appropriate. And for instance, in Bailey versus our container corporation, this court said it is only necessary and appropriate to file a cross appeal when a party seeks to enlarge its own rights under the judgment which we are not attempting to do. Or to lessen the rights that it's adversary and the judgment, which we are also not seeking to do, we simply seek to affirm the dismissal. And so we are not allowed to cross appeal. Going to the right-and-the-s issue, which we believe cuts across all of the cases here, the fundamental question is what could have happened if the administrative process had been exhausted, not what would have happened. Where there's some possibility of obtaining permission to conduct the activity at issue, exhaustion of the administrative process is necessary. And some possibility exists whenever the agency has a discretionary standard. There's no question that we are dealing with the discretionary standard here. Both Alipa and Lepre say that HUD may approve a request to pre-pay and under both statutes HUD was directed to assess whether implementation of the owner's plan, and that's important if the owner's plan that is being submitted, would materially increase economic hardship on current tenants, they had to consider whether or not the availability of comparable and affordable housing, a discretionary judgment, was available if the owner's plan soft to displace tenants, and HUD was to evaluate whether implementation of the owner's plan would materially affect the availability of affordable housing in the area that the plan is properly could reasonably be expected to serve. Again, discretionary lines. I think that though, and Janneke, too, that the statutory language does not provide pure discretion, that there are limits in the statute on the exercise of discretion, so it's not a circumstance where that would fall within the bounds of the other cases upon which the government relies, whether it's pure discretion given in the statute. I think it's important to recognize the context in which the court was talking about discretion. In Janneke, too, talking about the model plaintiffs, the court said the party agreed that HUD would not allow pre-payment under the statutory standard. What we said in Janneke, too, is that you have to look to the statute, and the statute found the discretion. So, to the extent that the discretion is limited, then HUD can't act. So that's why the court said that there was certain facts that could establish utility because the fact would say that under the statute HUD would have zero discretion. There's an important argument that was not presented in Janneke, too, that I want to mention to the court, and it's an argument that the United States did not make in Janneke, too. Because you're talking about implementation of the owner's plan of action, the owner is able to craft a plan of action that can satisfy the statutory criteria. Not all plans that the owner could submit would be disapproved. Now, the court in Janneke, too, was talking about a plan of action where the owner went in and was going to immediately raise rents on current tenants by more than 10%. But the fact that they could craft a plan that HUD would approve is not the same thing as them having to do it. They could say, yeah, but we wanted high-income condos. The fact that we could have created a plan that you would have ultimately approved is irrelevant because that's not what we intended to do. If you look at what the Supreme Court has said on this subject, in the McDonald's case, in Williamson County, in other cases where the Supreme Court has been talking about exhaustion and futility, the Supreme Court has said that where a project owner goes in and says, I want to build 200 houses on this plot of land, and they are rejected. They've actually applied and they're rejected. Unless the record establishes that they couldn't have built 100 houses on that plot of land, they still have to apply a second time in Palazolo for instance. That doesn't answer my question because my question was, suppose such a record here was clear that they wanted to put up high-income, high big, expensive condos, million dollar plus condos a piece. That is clearly something HUD would not have had the discretion to approve because it would have absolutely modified dramatically the availability of low-income housing in the area because none of the current tenants would have been able to stay. So if that was their plan, and if theoretically they have a right to do whatever they want with their property after 20 years, I don't understand how the fact that they could have put in moderate housing, maybe I don't understand how that affects the futility analysis that we're discussing. It affects it because the fundamental thing that the Supreme Court has said that you have to do in exhausting is have the responsible agency establish what uses of the property would be allowed. Now, you are postulating a plan that HUD would have denied. There can be plans that would be denied and plans that would be accepted under a discretionary standard. And you have to, by applying to the agency, get a final decision that tells that establishes how you can use the problem. So what your suggestion is an iterative process where the property owner is going to spend the entire rest of the mortgage period going in incremental steps trying to get what it wants out of HUD and being rejected time. And again, that can't possibly be put to Supreme Court contemplated when you're talking about a fixed-term mortgage like this because what you're saying is they're going to commit a stand putting up all high-income housing, HUD's going to reject

. Although frankly, the preservation history is similar in that none of the plaintiffs here did see code permission to pre-pay. So that aspect at least is similar. They went different routes as far as seeking benefits under the statute, which virtually all of them did see kind of the statute. With respect, you didn't eagreze any of these issues to the red briefs. So obviously we didn't know if that's limitations or the attack on key one and two or even other issues. So what is your response to the argument with respect to the fact that you should have cross appeal? Well, as to the cross appeal, Your Honor, it is exactly what was discussed earlier. This court has said that it's improper for the United States to file a cross appeal where we are not seeking to change the judgment. The judgment here as to all of these plaintiffs that are before the court today is a judgment of dismissal. And we are simply providing alternative grounds for affirming that dismissal. This is how you say that none of these plaintiffs in any of these cases sought permission to pre-pay. That's correct, Your Honor. Not a single one. Okay. So as to your cross appeal, your question, Your Honor, the law on the circuit is clear about when a cross appeal is appropriate and frankly when a cross appeal is not appropriate. And for instance, in Bailey versus our container corporation, this court said it is only necessary and appropriate to file a cross appeal when a party seeks to enlarge its own rights under the judgment which we are not attempting to do. Or to lessen the rights that it's adversary and the judgment, which we are also not seeking to do, we simply seek to affirm the dismissal. And so we are not allowed to cross appeal. Going to the right-and-the-s issue, which we believe cuts across all of the cases here, the fundamental question is what could have happened if the administrative process had been exhausted, not what would have happened. Where there's some possibility of obtaining permission to conduct the activity at issue, exhaustion of the administrative process is necessary. And some possibility exists whenever the agency has a discretionary standard. There's no question that we are dealing with the discretionary standard here. Both Alipa and Lepre say that HUD may approve a request to pre-pay and under both statutes HUD was directed to assess whether implementation of the owner's plan, and that's important if the owner's plan that is being submitted, would materially increase economic hardship on current tenants, they had to consider whether or not the availability of comparable and affordable housing, a discretionary judgment, was available if the owner's plan soft to displace tenants, and HUD was to evaluate whether implementation of the owner's plan would materially affect the availability of affordable housing in the area that the plan is properly could reasonably be expected to serve. Again, discretionary lines. I think that though, and Janneke, too, that the statutory language does not provide pure discretion, that there are limits in the statute on the exercise of discretion, so it's not a circumstance where that would fall within the bounds of the other cases upon which the government relies, whether it's pure discretion given in the statute. I think it's important to recognize the context in which the court was talking about discretion. In Janneke, too, talking about the model plaintiffs, the court said the party agreed that HUD would not allow pre-payment under the statutory standard. What we said in Janneke, too, is that you have to look to the statute, and the statute found the discretion. So, to the extent that the discretion is limited, then HUD can't act. So that's why the court said that there was certain facts that could establish utility because the fact would say that under the statute HUD would have zero discretion. There's an important argument that was not presented in Janneke, too, that I want to mention to the court, and it's an argument that the United States did not make in Janneke, too. Because you're talking about implementation of the owner's plan of action, the owner is able to craft a plan of action that can satisfy the statutory criteria. Not all plans that the owner could submit would be disapproved. Now, the court in Janneke, too, was talking about a plan of action where the owner went in and was going to immediately raise rents on current tenants by more than 10%. But the fact that they could craft a plan that HUD would approve is not the same thing as them having to do it. They could say, yeah, but we wanted high-income condos. The fact that we could have created a plan that you would have ultimately approved is irrelevant because that's not what we intended to do. If you look at what the Supreme Court has said on this subject, in the McDonald's case, in Williamson County, in other cases where the Supreme Court has been talking about exhaustion and futility, the Supreme Court has said that where a project owner goes in and says, I want to build 200 houses on this plot of land, and they are rejected. They've actually applied and they're rejected. Unless the record establishes that they couldn't have built 100 houses on that plot of land, they still have to apply a second time in Palazolo for instance. That doesn't answer my question because my question was, suppose such a record here was clear that they wanted to put up high-income, high big, expensive condos, million dollar plus condos a piece. That is clearly something HUD would not have had the discretion to approve because it would have absolutely modified dramatically the availability of low-income housing in the area because none of the current tenants would have been able to stay. So if that was their plan, and if theoretically they have a right to do whatever they want with their property after 20 years, I don't understand how the fact that they could have put in moderate housing, maybe I don't understand how that affects the futility analysis that we're discussing. It affects it because the fundamental thing that the Supreme Court has said that you have to do in exhausting is have the responsible agency establish what uses of the property would be allowed. Now, you are postulating a plan that HUD would have denied. There can be plans that would be denied and plans that would be accepted under a discretionary standard. And you have to, by applying to the agency, get a final decision that tells that establishes how you can use the problem. So what your suggestion is an iterative process where the property owner is going to spend the entire rest of the mortgage period going in incremental steps trying to get what it wants out of HUD and being rejected time. And again, that can't possibly be put to Supreme Court contemplated when you're talking about a fixed-term mortgage like this because what you're saying is they're going to commit a stand putting up all high-income housing, HUD's going to reject. Okay, darn it. I'm going to put up 50% high-income housing, HUD's going to reject. It can have about 49%, 38%, 72%. Where can we go? So the onus is on them to keep applying until you finally say yes, and then we know where the boundaries are. And only then can they go to court to complain about the fact they couldn't do what they wanted to do to begin with? No, Your Honor. And I would point you to the Palozolo decision. I would point you to the Pec decision in this court. And the Maguire decision in this court. In Palozolo, the owner did in fact have to apply twice. Before the Supreme Court said we have established how this property can be used and you don't have to apply a third time. In this court's HECC decision, the court said the, and I think I can give you a pretty close quote, that the futilities take exception simply serves to protect the property owner from being required to submit multiple applications when the matter in which the first application was denied makes it clear that no project will be approved. So if you apply and you learn from that application process where the bounds are under HECC, under Palozolo, under Maguire, you don't have to apply second time. Why does it matter where the bounds are if the bounds are anywhere other than where you want them to be? When you have a property right that has been taken, who the HECC cares what they would let you do and not let you do, if you can't do what you want to do? Because to establish the taking of your honor, when you get to the mayor. Now that's just damages, that's not futility. I don't see how that is relevant to futility. I see how it's absolutely relevant to damages, right? Because well they wouldn't give you everything you wanted but they would have actually given you 90% of what you wanted. So I totally see how that is relevant evidence. I just don't see how it's relevant to the point of futility. The reason it's relevant on liability or honor and not simply to what just compensation is, is because under Penn Central you have to evaluate the economic impact among other factors to establish whether a taking has occurred at all. It could be that HUD said you can't for your pay your mortgage at all. And in fact this court has affirmed cases where HUD has said you cannot pre-pay your mortgage at all but it is not a taking. And it is not a taking because looking at economic impact, looking at investment-backed expectations, looking at the character of the government actions, there's no taking. But once again I understand completely how that goes to liability and the merit just like it could also go to damages both both. But I don't understand how it goes to futility because you can absolutely bring all of that out in the course of the actual proceeding. But the bottom line is it's still totally futile for them to go through the application process at HUD because they can't get what they want. And then they want to argue that by not being able to have what they wanted an unfettered property right to do with their property whatever they wish that there's been a taking. Now you and them can both bring out all of these facts in deciding whether on the merits there's been a taking but I don't understand how that impedes their ability to get into court. But that's exactly what happened in cases like Williamson County and McDonald's, your honor, where the court says that submission of a grandiose plan that is denied does not necessarily make your claim right. Now it can underhept under palazolo if the submission of that grandiose plan goes in and it establishes the parameters of the use of the property. What is it Williamson County? It's just the Supreme Court opinion. It is. And actually use the word grandiose. I believe it does. Who wrote that? I'm sorry you're right. I don't remember who the majority of things were written by. Can we shift to the prepayment obligations to payment issue? You know you're reference to 10 central set of those are regulatory cases. They don't have to do with the contractual thing. And I understand the government's arguments but the one thing that I found kind of compelling was that the government doesn't really explain why it kept saying repeatedly, repeatedly, that it doesn't matter what the mortgage notes say. So deal with the 1995 letter. Let me explain that. And I think we have a question in our brief that touches on this. Yes. That's a little. That's for me is always a red flag when someone just dropped it in a footnote and it's a pretty bad fact. Well, it's not because it's a bad fact. It's because it's collateral to the issue. But what liproset is that you can proceed under this statute. If you are what was defined as eligible low income housing and that's what's discussed in these letters

. Okay, darn it. I'm going to put up 50% high-income housing, HUD's going to reject. It can have about 49%, 38%, 72%. Where can we go? So the onus is on them to keep applying until you finally say yes, and then we know where the boundaries are. And only then can they go to court to complain about the fact they couldn't do what they wanted to do to begin with? No, Your Honor. And I would point you to the Palozolo decision. I would point you to the Pec decision in this court. And the Maguire decision in this court. In Palozolo, the owner did in fact have to apply twice. Before the Supreme Court said we have established how this property can be used and you don't have to apply a third time. In this court's HECC decision, the court said the, and I think I can give you a pretty close quote, that the futilities take exception simply serves to protect the property owner from being required to submit multiple applications when the matter in which the first application was denied makes it clear that no project will be approved. So if you apply and you learn from that application process where the bounds are under HECC, under Palozolo, under Maguire, you don't have to apply second time. Why does it matter where the bounds are if the bounds are anywhere other than where you want them to be? When you have a property right that has been taken, who the HECC cares what they would let you do and not let you do, if you can't do what you want to do? Because to establish the taking of your honor, when you get to the mayor. Now that's just damages, that's not futility. I don't see how that is relevant to futility. I see how it's absolutely relevant to damages, right? Because well they wouldn't give you everything you wanted but they would have actually given you 90% of what you wanted. So I totally see how that is relevant evidence. I just don't see how it's relevant to the point of futility. The reason it's relevant on liability or honor and not simply to what just compensation is, is because under Penn Central you have to evaluate the economic impact among other factors to establish whether a taking has occurred at all. It could be that HUD said you can't for your pay your mortgage at all. And in fact this court has affirmed cases where HUD has said you cannot pre-pay your mortgage at all but it is not a taking. And it is not a taking because looking at economic impact, looking at investment-backed expectations, looking at the character of the government actions, there's no taking. But once again I understand completely how that goes to liability and the merit just like it could also go to damages both both. But I don't understand how it goes to futility because you can absolutely bring all of that out in the course of the actual proceeding. But the bottom line is it's still totally futile for them to go through the application process at HUD because they can't get what they want. And then they want to argue that by not being able to have what they wanted an unfettered property right to do with their property whatever they wish that there's been a taking. Now you and them can both bring out all of these facts in deciding whether on the merits there's been a taking but I don't understand how that impedes their ability to get into court. But that's exactly what happened in cases like Williamson County and McDonald's, your honor, where the court says that submission of a grandiose plan that is denied does not necessarily make your claim right. Now it can underhept under palazolo if the submission of that grandiose plan goes in and it establishes the parameters of the use of the property. What is it Williamson County? It's just the Supreme Court opinion. It is. And actually use the word grandiose. I believe it does. Who wrote that? I'm sorry you're right. I don't remember who the majority of things were written by. Can we shift to the prepayment obligations to payment issue? You know you're reference to 10 central set of those are regulatory cases. They don't have to do with the contractual thing. And I understand the government's arguments but the one thing that I found kind of compelling was that the government doesn't really explain why it kept saying repeatedly, repeatedly, that it doesn't matter what the mortgage notes say. So deal with the 1995 letter. Let me explain that. And I think we have a question in our brief that touches on this. Yes. That's a little. That's for me is always a red flag when someone just dropped it in a footnote and it's a pretty bad fact. Well, it's not because it's a bad fact. It's because it's collateral to the issue. But what liproset is that you can proceed under this statute. If you are what was defined as eligible low income housing and that's what's discussed in these letters. What is eligible low income housing? And lipric defined the term as project developed under section 221D3 or 236 that quote under regulation or contract in effect before February 5, 1988 is or will become within 24 months eligible for prepayment without the program. So that's the level of the secretary. The key language there is under regulation or contract. You will allow to proceed under lipra if HUD's pretty 1988 regulations would have allowed it or if your contract would have allowed it. And so even when you didn't have a contract that had the right in it. If under HUD's regulations superseding that contract language, you would have proceeded. You're allowed to proceed to get the benefits in lipra. And that's what's talked about in these letters is are you eligible to proceed under lipra to get the benefits that these statutes provided. And these properties that had no contract right to prepay are still allowed to proceed under lipra because of earlier regulations. Regulations that were expressly subject to change but nowhere at no time did they have a contract right. And that's what's key for the taking plan here, your honor is that the property interest that's alleged is a contract right to prepay. And in that is in the case at least as do six projects, other projects did have in their mortgage notes the ability to prepay after 20 years. But as to six properties, they had no such contract right. And HUD regulations didn't change that. It was either in the contract, there's plain language in the contract that didn't confer it, it was either there or it's not an as do. But regulations didn't change that what do we make of the federal register site for the proposed rule where it actually says the regulation will trump the mortgage note even if the mortgage note says you can't prepay. Before before lipra was enacted before a lipa was enacted HUD it construed its regulations as preempting contract language. And so if under HUD regulations you could prepay the regulations would give you that right. The problem is that if you are basing your taking claim on a right in regulations that are law that are expressly subject to change, your taking claim fails. The reason it fails is this court's decisions in let me get the name to write firm was one of the decisions. And I think that I think that the closing counsel pretty much indicated he understood the same which is why he was pinching it on a contract. But why then if there was some generalized understanding at the time these contracts were entered into that you had this right through regulation it would trump anything in the language of the statute. Would that be enough? No, because it's the contract right it is allegedly taken. And here we've got contracts with clear language. At the beginning and end of contract interpretation where there's clear and ambiguous language in that line. I didn't look at all six do all six of the contracts that issue have an actual prohibition I looked at at least two and they had actual prohibitions no prepayment short of 40 years no prepayment period do all six of them have that clause. Five of the six of them have that you can never make this easy on me. I'm sorry the sixth contract. Which one is the sixth? Do you remember which one it is? I do not all have my head. It was neither farthinian nor milwood. Dollary and Stewart. And it was not dolly and it was one of the others. One of the thefts for one. I believe so. Well, it has to be because the only three left. That contract was not found but we had an admission in the record that it did not contain the right to prepay. So we don't have the actual document but we have an admission in the record. The admission that it didn't have a right to prepay or admission that it expressly prohibit a pre-present. You see the difference I'm drawing. The difference I'm drawing is between a contract which absolutely prohibits certain pre-payment and a contract which is otherwise silent where the regulations could be deemed. I understand the distinction you're making here your honor but in this particular case the distinction is without a difference. And the reason is that all of the contracts expressly addressed pre-payment. And so if it didn't expressly say you could prepay it expressly said you couldn't prepay. So because it was actually addressed in the contracts, if there's a concession then it didn't contain the right. You pointed out that the regulations were expressly amendable but they were never amended. They were amended once Lipra and Alipa came into force your honor because HUD issued new regulations talking about when you couldn't prepay what you had to do to apply to prepay. So the language in those regulations what was required the statutes changed it first of all. And after the statutes changed it also issued regulations that modified things as well

. What is eligible low income housing? And lipric defined the term as project developed under section 221D3 or 236 that quote under regulation or contract in effect before February 5, 1988 is or will become within 24 months eligible for prepayment without the program. So that's the level of the secretary. The key language there is under regulation or contract. You will allow to proceed under lipra if HUD's pretty 1988 regulations would have allowed it or if your contract would have allowed it. And so even when you didn't have a contract that had the right in it. If under HUD's regulations superseding that contract language, you would have proceeded. You're allowed to proceed to get the benefits in lipra. And that's what's talked about in these letters is are you eligible to proceed under lipra to get the benefits that these statutes provided. And these properties that had no contract right to prepay are still allowed to proceed under lipra because of earlier regulations. Regulations that were expressly subject to change but nowhere at no time did they have a contract right. And that's what's key for the taking plan here, your honor is that the property interest that's alleged is a contract right to prepay. And in that is in the case at least as do six projects, other projects did have in their mortgage notes the ability to prepay after 20 years. But as to six properties, they had no such contract right. And HUD regulations didn't change that. It was either in the contract, there's plain language in the contract that didn't confer it, it was either there or it's not an as do. But regulations didn't change that what do we make of the federal register site for the proposed rule where it actually says the regulation will trump the mortgage note even if the mortgage note says you can't prepay. Before before lipra was enacted before a lipa was enacted HUD it construed its regulations as preempting contract language. And so if under HUD regulations you could prepay the regulations would give you that right. The problem is that if you are basing your taking claim on a right in regulations that are law that are expressly subject to change, your taking claim fails. The reason it fails is this court's decisions in let me get the name to write firm was one of the decisions. And I think that I think that the closing counsel pretty much indicated he understood the same which is why he was pinching it on a contract. But why then if there was some generalized understanding at the time these contracts were entered into that you had this right through regulation it would trump anything in the language of the statute. Would that be enough? No, because it's the contract right it is allegedly taken. And here we've got contracts with clear language. At the beginning and end of contract interpretation where there's clear and ambiguous language in that line. I didn't look at all six do all six of the contracts that issue have an actual prohibition I looked at at least two and they had actual prohibitions no prepayment short of 40 years no prepayment period do all six of them have that clause. Five of the six of them have that you can never make this easy on me. I'm sorry the sixth contract. Which one is the sixth? Do you remember which one it is? I do not all have my head. It was neither farthinian nor milwood. Dollary and Stewart. And it was not dolly and it was one of the others. One of the thefts for one. I believe so. Well, it has to be because the only three left. That contract was not found but we had an admission in the record that it did not contain the right to prepay. So we don't have the actual document but we have an admission in the record. The admission that it didn't have a right to prepay or admission that it expressly prohibit a pre-present. You see the difference I'm drawing. The difference I'm drawing is between a contract which absolutely prohibits certain pre-payment and a contract which is otherwise silent where the regulations could be deemed. I understand the distinction you're making here your honor but in this particular case the distinction is without a difference. And the reason is that all of the contracts expressly addressed pre-payment. And so if it didn't expressly say you could prepay it expressly said you couldn't prepay. So because it was actually addressed in the contracts, if there's a concession then it didn't contain the right. You pointed out that the regulations were expressly amendable but they were never amended. They were amended once Lipra and Alipa came into force your honor because HUD issued new regulations talking about when you couldn't prepay what you had to do to apply to prepay. So the language in those regulations what was required the statutes changed it first of all. And after the statutes changed it also issued regulations that modified things as well. So would it be your argument that the 1992 and 1995 letters interpreting the regulations become meaningless at that point or it was a language that was being addressed by the Assistant General Counsel still the same? Well first of all the language in the statute had not changed at that time. That could be directly answered your question. That said we're not talking about interpretation of the statute in regulations where you might get Chevron difference here. We're talking about a letter about one specific property for instance in the 1995 letter not that is not one of these particular properties at all. So yes there is that letter from HUD to that owner about that property but I think we need to be careful in saying that one letter on one occasion is a proper way to interpret the statute and the regulations across the board. But the language at J-A-97 is very broad. It is not saying and on your particular facts this is what happens. It says therefore despite language in a note prohibiting prepayments the project mortars will become eligible for prepayment without prior HUD consent. So it says despite language in the note prohibiting prepayment. And I believe that is talking about the old HUD regulations around right after looking at the language but that is how HUD interpreted its regulations before a letter. And that's a question. Did the language that he was addressing, the precise language that he was addressing change? HUD implemented new regulations your honor in 1992. In March 1992 to which he pointed I know they're new tell me what about them is new is this analysis completely wiped out by the change or did the change leave in place the very specific part that he was discussing? No because the change made it so that you then had to apply to HUD to prepay. The new regulations required an application to HUD to prepay. You couldn't do it unilaterally the way the 1970 regulations allowed. So the prior I didn't understand this or appreciate it by the fact the prior regulations didn't allow unilaterally prepayment. It was only the new regulations that came along and for the first time suggested that in order to prepay you have to apply. The new regulations in 1992 implemented the statutory language in Libra and required an application. But it was applied was it not after 20 years or in terms of the particular contractual arrangements that have been established for the prior law? I'm sorry. The perception of the title aid change was that in part it was intended to liberalize the eventual prepayment possibilities in view of change circumstances. The new language allowed HUD discretion to allow an owner to prepay even after the requirement to apply existed. I'd like to with the rest of my time talk about this. Before you move on. Just one last thing. We're talking about whether or not these council letters and possibly the statement and the proposed rule of our registered statement created an understanding about what the regulations allow. What I didn't hear you say and I want to make sure I understand your argument though is that all of that is irrelevant to whether there is a contractual right. I just want to make sure I understand your argument and I haven't missed it. Yes, that is absolutely correct. Even if he is 100% right about what the 92 and 95 letters indicate what HUD will do under its regulations. Even if everything, I guess I kind of don't know why you're fighting them so much. And you're spending some time fighting them that it's distracting from your true point which I think is even if he's 100% right on the proposed rule and both council letters, they're still only a regulatory based property right at best and not a contract based. And if I've distracted from that, I apologize or I don't know that is exactly our point is that it has to be a contract right because that's a bit of a ledge and you don't have a right in the regulation. Can we go back to rightness for a second? Yes. One of the things that the CFC found on reconsideration is that the government never made any specific attacks on any one of the Smith and T.1, T.2, or T.3. The government simply took the broad base approach that they could never under any test prove futility. And the CFC found that that was inconsistent with our analysis in T.1, T.2. And so that's in because there have been no attack on Smith's methodology otherwise or on the propriety of how those tests match up with 41 away or with T.1, T.1, T.2, that they decided to enter some rejection. So why is it and you still have a draft test at all? And that was exactly what I wanted to go to, Your Honor, and allow me to do that. And the court is wrong that we did not address. I thought that's an event like that

. So would it be your argument that the 1992 and 1995 letters interpreting the regulations become meaningless at that point or it was a language that was being addressed by the Assistant General Counsel still the same? Well first of all the language in the statute had not changed at that time. That could be directly answered your question. That said we're not talking about interpretation of the statute in regulations where you might get Chevron difference here. We're talking about a letter about one specific property for instance in the 1995 letter not that is not one of these particular properties at all. So yes there is that letter from HUD to that owner about that property but I think we need to be careful in saying that one letter on one occasion is a proper way to interpret the statute and the regulations across the board. But the language at J-A-97 is very broad. It is not saying and on your particular facts this is what happens. It says therefore despite language in a note prohibiting prepayments the project mortars will become eligible for prepayment without prior HUD consent. So it says despite language in the note prohibiting prepayment. And I believe that is talking about the old HUD regulations around right after looking at the language but that is how HUD interpreted its regulations before a letter. And that's a question. Did the language that he was addressing, the precise language that he was addressing change? HUD implemented new regulations your honor in 1992. In March 1992 to which he pointed I know they're new tell me what about them is new is this analysis completely wiped out by the change or did the change leave in place the very specific part that he was discussing? No because the change made it so that you then had to apply to HUD to prepay. The new regulations required an application to HUD to prepay. You couldn't do it unilaterally the way the 1970 regulations allowed. So the prior I didn't understand this or appreciate it by the fact the prior regulations didn't allow unilaterally prepayment. It was only the new regulations that came along and for the first time suggested that in order to prepay you have to apply. The new regulations in 1992 implemented the statutory language in Libra and required an application. But it was applied was it not after 20 years or in terms of the particular contractual arrangements that have been established for the prior law? I'm sorry. The perception of the title aid change was that in part it was intended to liberalize the eventual prepayment possibilities in view of change circumstances. The new language allowed HUD discretion to allow an owner to prepay even after the requirement to apply existed. I'd like to with the rest of my time talk about this. Before you move on. Just one last thing. We're talking about whether or not these council letters and possibly the statement and the proposed rule of our registered statement created an understanding about what the regulations allow. What I didn't hear you say and I want to make sure I understand your argument though is that all of that is irrelevant to whether there is a contractual right. I just want to make sure I understand your argument and I haven't missed it. Yes, that is absolutely correct. Even if he is 100% right about what the 92 and 95 letters indicate what HUD will do under its regulations. Even if everything, I guess I kind of don't know why you're fighting them so much. And you're spending some time fighting them that it's distracting from your true point which I think is even if he's 100% right on the proposed rule and both council letters, they're still only a regulatory based property right at best and not a contract based. And if I've distracted from that, I apologize or I don't know that is exactly our point is that it has to be a contract right because that's a bit of a ledge and you don't have a right in the regulation. Can we go back to rightness for a second? Yes. One of the things that the CFC found on reconsideration is that the government never made any specific attacks on any one of the Smith and T.1, T.2, or T.3. The government simply took the broad base approach that they could never under any test prove futility. And the CFC found that that was inconsistent with our analysis in T.1, T.2. And so that's in because there have been no attack on Smith's methodology otherwise or on the propriety of how those tests match up with 41 away or with T.1, T.1, T.2, that they decided to enter some rejection. So why is it and you still have a draft test at all? And that was exactly what I wanted to go to, Your Honor, and allow me to do that. And the court is wrong that we did not address. I thought that's an event like that. No, please, please, please, please, please, it's an important issue. Thank you, Your Honor. The court is wrong that we did not address that. We submitted declarations from Kevin East, these are in his declarations are in the joint appendix and from Morris Berry. Mr. East was the head of HUD's preservation division during the 1990s. Mr. Barry handled a portfolio of about 20, excuse me, of about 40 HUD projects and was personally responsible for processing under the preservation statutes. In their declarations, they talked specifically about Mr. Smith's tests, one, tests two, and tests three. They talked about all of them. And as to test one, Mr. Smith's first test, he created an affordable areas list. And his proposition was that if a project was not in one of these affordable areas, HUD would have denied prepayment. Such a prohibition is contrary to the express language of the statute where it says that HUD will set implementation of the owner's plan on an individualized basis. And the affordable areas, Mr. Barry and Mr. East both said, quote, the affordable areas list was not used in evaluating requests to prepay pursuits of the preservation statutes. And they went on. They said projects located in metropolitan areas that were not on the affordable areas list remained potential candidates for prepayment. Directly contrary to Mr. Smith's so-called test, we have testimony from two HUD individuals, sworn affidavits, that say his preferred test is simply flat out wrong. And it's more problematic still because Mr. Smith's test doesn't track the terms of the statutory provision that showed what HUD had to analyze in terms of a plan of action. The Section 4108 of Lippa, Section 225 of Alipa said nothing about an affordable areas test. And so nothing in the statutory language spoke to this test number one. And we have two HUD officials submitting declaration saying that this test does not show that a project couldn't prepay. Mr. Smith's second test has much the same problem that Mr. East and Mr. Barry spoke to this test. The second test sought to evaluate whether the rental market containing the plan is properly was soft. As the term soft was used in HUD's interim guidance for the so-called windfall profit test. How do you deal with the fact that these decorations were before the court and the court actually looked at them and said, I think these are weak and I give them very little weight. Well, your honor, first of all, because we are dealing with summary judgment, if we are actually dealing with what HUD would have done, we don't think that's the correct inquiry. We think it should be what HUD could have done. But if we're dealing with what HUD would have done at a summary judgment stage, the court is supposed to give all reasonable accept credibility and accept reasonable inferences from these declarations. Now, these declarations at a minimum show that simply adopting Mr. Smith's test is inappropriate on a motion for summary judgment. We have declarations conferverting his test and his approach. And so at a summary judgment motion, that shouldn't win the day. If what we're really talking about is what HUD would have done. The second test has the same problems in that Mr. Smith looked to see what was a soft market. And he opines that HUD would have denied an owner's plan of action if the rental market was not soft. But Mr. Smith and Mr. Barry explained that the windfall profits test was not a proxy for prepayment and that HUD could approve prepayment irrespective of whether a project passed or failed the windfall profits test

. No, please, please, please, please, please, it's an important issue. Thank you, Your Honor. The court is wrong that we did not address that. We submitted declarations from Kevin East, these are in his declarations are in the joint appendix and from Morris Berry. Mr. East was the head of HUD's preservation division during the 1990s. Mr. Barry handled a portfolio of about 20, excuse me, of about 40 HUD projects and was personally responsible for processing under the preservation statutes. In their declarations, they talked specifically about Mr. Smith's tests, one, tests two, and tests three. They talked about all of them. And as to test one, Mr. Smith's first test, he created an affordable areas list. And his proposition was that if a project was not in one of these affordable areas, HUD would have denied prepayment. Such a prohibition is contrary to the express language of the statute where it says that HUD will set implementation of the owner's plan on an individualized basis. And the affordable areas, Mr. Barry and Mr. East both said, quote, the affordable areas list was not used in evaluating requests to prepay pursuits of the preservation statutes. And they went on. They said projects located in metropolitan areas that were not on the affordable areas list remained potential candidates for prepayment. Directly contrary to Mr. Smith's so-called test, we have testimony from two HUD individuals, sworn affidavits, that say his preferred test is simply flat out wrong. And it's more problematic still because Mr. Smith's test doesn't track the terms of the statutory provision that showed what HUD had to analyze in terms of a plan of action. The Section 4108 of Lippa, Section 225 of Alipa said nothing about an affordable areas test. And so nothing in the statutory language spoke to this test number one. And we have two HUD officials submitting declaration saying that this test does not show that a project couldn't prepay. Mr. Smith's second test has much the same problem that Mr. East and Mr. Barry spoke to this test. The second test sought to evaluate whether the rental market containing the plan is properly was soft. As the term soft was used in HUD's interim guidance for the so-called windfall profit test. How do you deal with the fact that these decorations were before the court and the court actually looked at them and said, I think these are weak and I give them very little weight. Well, your honor, first of all, because we are dealing with summary judgment, if we are actually dealing with what HUD would have done, we don't think that's the correct inquiry. We think it should be what HUD could have done. But if we're dealing with what HUD would have done at a summary judgment stage, the court is supposed to give all reasonable accept credibility and accept reasonable inferences from these declarations. Now, these declarations at a minimum show that simply adopting Mr. Smith's test is inappropriate on a motion for summary judgment. We have declarations conferverting his test and his approach. And so at a summary judgment motion, that shouldn't win the day. If what we're really talking about is what HUD would have done. The second test has the same problems in that Mr. Smith looked to see what was a soft market. And he opines that HUD would have denied an owner's plan of action if the rental market was not soft. But Mr. Smith and Mr. Barry explained that the windfall profits test was not a proxy for prepayment and that HUD could approve prepayment irrespective of whether a project passed or failed the windfall profits test. Moreover, and the court found this, Mr. Smith disregarded nine of the ten factors that HUD's regulations said you have to look at in evaluating whether a project was in an area that was soft. Ignored nine of the ten factors that HUD's regulations said you had to look at. And the trial court acknowledged that failing. We'll help you get out of the chair right right on this. And would you enlarge the security time by the time we run over for reputtle? We raise the new wishes. Thank you again, Your Honor. I would like to address some of the discussions that the court had with Mr. Harrington. I think one of the things that comes out of this discussion is the fact that notwithstanding Mr. Harrington's arguments, it was important and the government should have used the opportunity to file a cross appeal on the rightness issue and the statute of limitations issue, both of which came up pursuant to their opposition memoranda, their opposition briefs and not directly for the court. Mr. Harrington mentioned one of the authorities here which said that the cross appeals are not required except in those cases when a party is attempting to expand its rights under a judgment. That's clearly what the government's attempting to do here. If the court, for example, concludes that the theft of the four appellents claims are not precluded as a result of the prior decision by the fourth circuit, that party, there were certain number of different issues there. Presumably, if we prevail on our claims that we have brought challenging issue preclusion and so forth, that's what four would go back to presumably to be remanded into the court of federal claims. So, to pursue its taking claims because it's taking claims were deemed to be right by the lower court. So, for the government to say that it's not attempting to expand what it had before is clearly erroneous. It is attempting to put itself in a better position. It can't win twice. They won one's on one ground. They can't win twice. If we allowed that to have any idea what a nightmare it would be here in our court every single time there would be a cross appeal in every case because they didn't like something that would have made them win for a different reason than the one they actually won for. That's not the rule of how you decide what is a proper cross appeal and what is not. It would be a disaster for our court if it were. My point, Your Honor, is that the lower court has ruled in favor of the other claimants on their right and this claim. The government is attempting to subvert essentially the decision for all those other claimants who are proceeding on their take this claim in the lower court by challenging these claims of these appellants here without having properly raised this on a cross appeal. They are not allowed to raise this on a cross appeal. We just struck it and sent it back. So they have a right to raise it here. Now I understand it might well affect the ones that are continuing below. I get it but it's not on the basis of they couldn't have raised this on a cross appeal. We wouldn't have allowed it. Well, I think that the other point to bear in mind with respect to this is that the government is challenging. I don't think there's anywhere around it. I think the government is challenging this court's prior conclusions in the senior gardens case with respect to what constitutes futility for purposes of the right this determination. There's been a lot of discussion about that but it's clear that in senior gardens this court looked at very diligently and very discreetly looked at the issues of rightness and what these statutes required to do in order to satisfy futility standard year. In doing so the court stated that the test had changed and that in order to bring a claim there were very strict standards in the statute that must be satisfied before I could exercise any discretion. And that is clearly not what Mr. Harrington is what the government is arguing before you today. He wants to make an argument that something else should be the standard of this court should follow. He wants to argue that apparently some initial filing must be undertaken before futility determination can remain. That is not the holding of this court made in the same garden that's not the direction that we had when we were sent back to the court of federal claims once before on this matter. So the court, the government is making a direct act on CNEGA in the CC Associates case before this court that decision was reaffirmed that the understanding of futility was reaffirmed and we don't see any basis for the court to adopt any of a ruling here. It's very clear that unless the statute, the very strict mathematical statutes standards of these statutes are satisfied, HUD can't do anything. And cases such as the head case of the government sites are really about what happens. If you make the first application, what that, the impact that might be on subsequent applications indeed. I think the head case is really a question about what constitutes the final decision on one application for purposes of understanding the impact that might have on later decisions

. Moreover, and the court found this, Mr. Smith disregarded nine of the ten factors that HUD's regulations said you have to look at in evaluating whether a project was in an area that was soft. Ignored nine of the ten factors that HUD's regulations said you had to look at. And the trial court acknowledged that failing. We'll help you get out of the chair right right on this. And would you enlarge the security time by the time we run over for reputtle? We raise the new wishes. Thank you again, Your Honor. I would like to address some of the discussions that the court had with Mr. Harrington. I think one of the things that comes out of this discussion is the fact that notwithstanding Mr. Harrington's arguments, it was important and the government should have used the opportunity to file a cross appeal on the rightness issue and the statute of limitations issue, both of which came up pursuant to their opposition memoranda, their opposition briefs and not directly for the court. Mr. Harrington mentioned one of the authorities here which said that the cross appeals are not required except in those cases when a party is attempting to expand its rights under a judgment. That's clearly what the government's attempting to do here. If the court, for example, concludes that the theft of the four appellents claims are not precluded as a result of the prior decision by the fourth circuit, that party, there were certain number of different issues there. Presumably, if we prevail on our claims that we have brought challenging issue preclusion and so forth, that's what four would go back to presumably to be remanded into the court of federal claims. So, to pursue its taking claims because it's taking claims were deemed to be right by the lower court. So, for the government to say that it's not attempting to expand what it had before is clearly erroneous. It is attempting to put itself in a better position. It can't win twice. They won one's on one ground. They can't win twice. If we allowed that to have any idea what a nightmare it would be here in our court every single time there would be a cross appeal in every case because they didn't like something that would have made them win for a different reason than the one they actually won for. That's not the rule of how you decide what is a proper cross appeal and what is not. It would be a disaster for our court if it were. My point, Your Honor, is that the lower court has ruled in favor of the other claimants on their right and this claim. The government is attempting to subvert essentially the decision for all those other claimants who are proceeding on their take this claim in the lower court by challenging these claims of these appellants here without having properly raised this on a cross appeal. They are not allowed to raise this on a cross appeal. We just struck it and sent it back. So they have a right to raise it here. Now I understand it might well affect the ones that are continuing below. I get it but it's not on the basis of they couldn't have raised this on a cross appeal. We wouldn't have allowed it. Well, I think that the other point to bear in mind with respect to this is that the government is challenging. I don't think there's anywhere around it. I think the government is challenging this court's prior conclusions in the senior gardens case with respect to what constitutes futility for purposes of the right this determination. There's been a lot of discussion about that but it's clear that in senior gardens this court looked at very diligently and very discreetly looked at the issues of rightness and what these statutes required to do in order to satisfy futility standard year. In doing so the court stated that the test had changed and that in order to bring a claim there were very strict standards in the statute that must be satisfied before I could exercise any discretion. And that is clearly not what Mr. Harrington is what the government is arguing before you today. He wants to make an argument that something else should be the standard of this court should follow. He wants to argue that apparently some initial filing must be undertaken before futility determination can remain. That is not the holding of this court made in the same garden that's not the direction that we had when we were sent back to the court of federal claims once before on this matter. So the court, the government is making a direct act on CNEGA in the CC Associates case before this court that decision was reaffirmed that the understanding of futility was reaffirmed and we don't see any basis for the court to adopt any of a ruling here. It's very clear that unless the statute, the very strict mathematical statutes standards of these statutes are satisfied, HUD can't do anything. And cases such as the head case of the government sites are really about what happens. If you make the first application, what that, the impact that might be on subsequent applications indeed. I think the head case is really a question about what constitutes the final decision on one application for purposes of understanding the impact that might have on later decisions. But it doesn't, in any respect, deal with the situation of creating an alternative rule. But to be extent that the government is claiming that we had to do something else at this point. I think this government should continue to subvert with this course of CNEGA. But their underlying argument is that test 1 and test 2 by Smith don't demonstrate that HUD would not have approved pre-payment on these loans because they don't follow the regulatory standards that HUD was using to decide whether pre-payment was appropriate. Like, how do you respond to their argument that on the soft market point, Mr. Smith's test 2 only addressed one of the 9 or 10 that don't remember the exact number of criteria that HUD would have itself evaluated in assessing the impact of that standard? The question you're on is that there were multiple reasons why HUD would have found that an owner couldn't pre-pay. There were 10 different factors. As Mr. Smith's analysis says, all we had to find was one reason why they couldn't pre-pay. And if we, if we could demonstrate that the owner couldn't satisfy that one reason we didn't need to worry about all the factors. That his factors, the 10 factors are not, you know, of not things to be weighed and balanced, but it means you have to satisfy all the 10. I know what I'm saying that. Or it's fail anyone. It's failed anyone. That's all it took to pass the test. And that is correct. That's what the HUD regulation was saying. The, we thought profit test was an attempt to determine if there were any properties that might be applying for incentives, which they would not be entitled to because they were allowed to pre-pay. And Mr. Smith's approach, I think, is elegant and breathtakingly simple. If it was a test that was intended to be used to sort those properties that should not receive incentives because they could be paid. It could, the same method of looked logical structures, the same wickries could be applied to determine those properties, which could not be paid. And as I said, I think the judge looked at those tests in great detail. He did accept Mr. Smith's test and money, his expertise. He kept it in his full defeat as an expert. And I think under the circumstances analysis about test one and test two are fine. The government indicated that it argued that it brought forth declaration testimony from Mr. East and Mr. Berry. As the court indicated, Judge Damage did not accept those opinions. And we had rejected Mr. East's testimony because the government did not put Mr. East on the list of those people who were going to be who had knowledge on this. And then we didn't have an opportunity to pose him before his declaration was received. But if you look at the declaration, as the lower court found its principles are, we think essentially in a positive, there's a lot of discussion about what might have happened, what could have happened. If somebody, somewhere sometime at some point had come forward with an application that allowed for treatment. But in terms of understanding or attacking the evidence that was submitted for any of these specific elements or any of the plaintiffs, we respect to what we offered those reports of those declarations. I'm still having trouble with these fundamental issues. We're talking about taking the possibilities at a due time, if it's agreed, that there is a taking that one looks at investment back expectations and all of the other bases on which compensation would be grounded. And yet the government says that not one of these plaintiffs' petitions requested permission to prepay. How would this one reconcile all of this? Well, because your honor, if Congress wanted to allow our owners to prepay. But the regulations say that with permission, it isn't that this is a surprise. It's in the mortgages, it's in the trust documents. And the regulations, you did not find them, refer to authorization. The regulations that were in place for honor, that we are tying, for example, in connection with the rights of repay, that argument, all say that you may repay without HUD's consent. After 20 years, or in terms of the under the mortgage terms? That's right. And what happened when Congress enacted this statute is it imposed these extraordinarily strict criteria to say that if you wanted to prepay after the enactment of ELIPA and later with LIPA, if you wanted to prepay, you had to satisfy these incredibly strict criteria

. But it doesn't, in any respect, deal with the situation of creating an alternative rule. But to be extent that the government is claiming that we had to do something else at this point. I think this government should continue to subvert with this course of CNEGA. But their underlying argument is that test 1 and test 2 by Smith don't demonstrate that HUD would not have approved pre-payment on these loans because they don't follow the regulatory standards that HUD was using to decide whether pre-payment was appropriate. Like, how do you respond to their argument that on the soft market point, Mr. Smith's test 2 only addressed one of the 9 or 10 that don't remember the exact number of criteria that HUD would have itself evaluated in assessing the impact of that standard? The question you're on is that there were multiple reasons why HUD would have found that an owner couldn't pre-pay. There were 10 different factors. As Mr. Smith's analysis says, all we had to find was one reason why they couldn't pre-pay. And if we, if we could demonstrate that the owner couldn't satisfy that one reason we didn't need to worry about all the factors. That his factors, the 10 factors are not, you know, of not things to be weighed and balanced, but it means you have to satisfy all the 10. I know what I'm saying that. Or it's fail anyone. It's failed anyone. That's all it took to pass the test. And that is correct. That's what the HUD regulation was saying. The, we thought profit test was an attempt to determine if there were any properties that might be applying for incentives, which they would not be entitled to because they were allowed to pre-pay. And Mr. Smith's approach, I think, is elegant and breathtakingly simple. If it was a test that was intended to be used to sort those properties that should not receive incentives because they could be paid. It could, the same method of looked logical structures, the same wickries could be applied to determine those properties, which could not be paid. And as I said, I think the judge looked at those tests in great detail. He did accept Mr. Smith's test and money, his expertise. He kept it in his full defeat as an expert. And I think under the circumstances analysis about test one and test two are fine. The government indicated that it argued that it brought forth declaration testimony from Mr. East and Mr. Berry. As the court indicated, Judge Damage did not accept those opinions. And we had rejected Mr. East's testimony because the government did not put Mr. East on the list of those people who were going to be who had knowledge on this. And then we didn't have an opportunity to pose him before his declaration was received. But if you look at the declaration, as the lower court found its principles are, we think essentially in a positive, there's a lot of discussion about what might have happened, what could have happened. If somebody, somewhere sometime at some point had come forward with an application that allowed for treatment. But in terms of understanding or attacking the evidence that was submitted for any of these specific elements or any of the plaintiffs, we respect to what we offered those reports of those declarations. I'm still having trouble with these fundamental issues. We're talking about taking the possibilities at a due time, if it's agreed, that there is a taking that one looks at investment back expectations and all of the other bases on which compensation would be grounded. And yet the government says that not one of these plaintiffs' petitions requested permission to prepay. How would this one reconcile all of this? Well, because your honor, if Congress wanted to allow our owners to prepay. But the regulations say that with permission, it isn't that this is a surprise. It's in the mortgages, it's in the trust documents. And the regulations, you did not find them, refer to authorization. The regulations that were in place for honor, that we are tying, for example, in connection with the rights of repay, that argument, all say that you may repay without HUD's consent. After 20 years, or in terms of the under the mortgage terms? That's right. And what happened when Congress enacted this statute is it imposed these extraordinarily strict criteria to say that if you wanted to prepay after the enactment of ELIPA and later with LIPA, if you wanted to prepay, you had to satisfy these incredibly strict criteria. And you needed permission. And that one. I would tell that not one of these plaintiffs requested permission after those enactments. They did not your honor for the reasons that were stated in the declarations and the deposition testimony that we submitted in support of our motion for some adjustment. They, the owners, who, as I said, had been owned the property of many instances for decades, knew the property, knew the market, and also knew what the regulations and the statutes, the preservation statutes required. They came forward with it that we couldn't meet these standards. We were unable to do so because the standards required us to prove that was we could not prove. They required us to prove that there would be no adverse impact on the market if we were allowed to prepay our mortgage. And that's what we asked Mr. Smith to do, which you'd come up with a test that would allow us to evaluate, allow the court in a methodologically sound, and we think rigorous manner to come forward with evidence to demonstrate that you could not prepay. And for all of the plaintiffs, except for the handful whose claims we're looking at today on the right misissues, for all of the handful, Mr. Smith concluded that those plaintiffs, on the test-1 and test-2, could not in fact satisfy the statutory requirements of prepayment. So that's why the owners didn't do, didn't come forward to the ages. He did not ask to prepay because they knew that in order to do so, the government would be required to essentially ignore the requirements in the statute. And indeed, that's what this court said in C&AGA in 2001 that those statutes were extraordinarily strict and HUD had no discretion. But it couldn't do anything if you couldn't satisfy those regulatory, sorry, they couldn't satisfy the threshold requirements of the statute imposed to allow an owner to prepay. It's not surprising that the owner's reached this conclusion. There were thousands of properties in the United States that were covered by the Section 221 statute in Section 236. Only a handful of them, I think, that are very diligent efforts have identified only seven properties, not whole portfolio, that actually succeeded in prepayment, and perhaps less than a score of properties even asked to do so. And why? The reason is that the owners knew that they were not going to be allowed to prepay. Again, because if Congress wanted to let people prepay, they could have just stood by and not enacted the statute. But these statutes were enacted for a reason, and the reason was to prevent people from prepaying their mortgage. If you were already subject to an agreement that prepayment is prohibited for 40 years, why would this make any difference to these owners? The owners, in most instances, with the limited exception of the handful of plaintiffs who are arguing about their right to prepay, their contracts said that they could prepay in 20 years. Yes, well, looking at the exception. Yes. But I would also say, again, you're on a, that if you look at the regulations at the time under which these notes were drafted, and remember that this court and green briar made the point that the prepayment terms in these mortgage notes were derived from the high price. So this court is already tied the language of these notes to the regulations pursued to which they were drafted. And that's not an unusual thing in programs that involve the statutory programs that are implemented by an agency that have been carried out through the government of the private sector through various forms of contracts. The green briar case has already concluded that the language of the respective prepayment that some of these notes derives from the statutes. As applied to green briar. I've applied to green briar. Well, I think it was trying to make a general statement with respect to the relationship between the regulations that we've been talking about today and the notes took effect. But certainly, those people like the bio-forals and the other plaintiffs who have arguments with respect to the right to prepay, understood at the time they entered in what the regulations allowed. And read their notes to say if we stopped receiving these rent supplements which we were then receiving, we would be allowed to prepay. And indeed, that's what happened to the bio-forals. In December of 1987, they asked HUD to allow them to prepay because HUD had said to them if you stopped receiving the rent supplement contract and other of the 68 program, among other things, you will be allowed to prepay. So in December of 1987, they wrote to HUD. And HUD wrote back in January of 1988 saying we think the statutes could be changing, but right now it is true that we do allow owners to prepay their mortgages. And by the way, here are the steps that you must follow if you want to prepay your mortgage. So HUD had the same understanding with respect to the bio-forals that they were in early case because they had an early prepayment. But it's always true though, is it not that when you act in reliance on governmentally granted rights, whether it be by statute or regulation, you always act at risk because the government could change those statutes or regulations. Well, I think that the answer is pointed out that at the time they entered into the program, they knew what those regulations said. They knew what rights came along with it, came along with those notes. And at every point, up until this case, when the government raised this issue about the right to prepay, the government has consistently said that these notes, even if they don't specifically say that there's a right to prepay, the note has to be interpreted to allow for that. It's revisionist history, it's worse, but the government after that. One last question, can I real quick, I just want to make sure my count is right. I have six properties where there was a prohibition against prepayment in the mortgage. And that's really the only properties you're talking about right now

. And you needed permission. And that one. I would tell that not one of these plaintiffs requested permission after those enactments. They did not your honor for the reasons that were stated in the declarations and the deposition testimony that we submitted in support of our motion for some adjustment. They, the owners, who, as I said, had been owned the property of many instances for decades, knew the property, knew the market, and also knew what the regulations and the statutes, the preservation statutes required. They came forward with it that we couldn't meet these standards. We were unable to do so because the standards required us to prove that was we could not prove. They required us to prove that there would be no adverse impact on the market if we were allowed to prepay our mortgage. And that's what we asked Mr. Smith to do, which you'd come up with a test that would allow us to evaluate, allow the court in a methodologically sound, and we think rigorous manner to come forward with evidence to demonstrate that you could not prepay. And for all of the plaintiffs, except for the handful whose claims we're looking at today on the right misissues, for all of the handful, Mr. Smith concluded that those plaintiffs, on the test-1 and test-2, could not in fact satisfy the statutory requirements of prepayment. So that's why the owners didn't do, didn't come forward to the ages. He did not ask to prepay because they knew that in order to do so, the government would be required to essentially ignore the requirements in the statute. And indeed, that's what this court said in C&AGA in 2001 that those statutes were extraordinarily strict and HUD had no discretion. But it couldn't do anything if you couldn't satisfy those regulatory, sorry, they couldn't satisfy the threshold requirements of the statute imposed to allow an owner to prepay. It's not surprising that the owner's reached this conclusion. There were thousands of properties in the United States that were covered by the Section 221 statute in Section 236. Only a handful of them, I think, that are very diligent efforts have identified only seven properties, not whole portfolio, that actually succeeded in prepayment, and perhaps less than a score of properties even asked to do so. And why? The reason is that the owners knew that they were not going to be allowed to prepay. Again, because if Congress wanted to let people prepay, they could have just stood by and not enacted the statute. But these statutes were enacted for a reason, and the reason was to prevent people from prepaying their mortgage. If you were already subject to an agreement that prepayment is prohibited for 40 years, why would this make any difference to these owners? The owners, in most instances, with the limited exception of the handful of plaintiffs who are arguing about their right to prepay, their contracts said that they could prepay in 20 years. Yes, well, looking at the exception. Yes. But I would also say, again, you're on a, that if you look at the regulations at the time under which these notes were drafted, and remember that this court and green briar made the point that the prepayment terms in these mortgage notes were derived from the high price. So this court is already tied the language of these notes to the regulations pursued to which they were drafted. And that's not an unusual thing in programs that involve the statutory programs that are implemented by an agency that have been carried out through the government of the private sector through various forms of contracts. The green briar case has already concluded that the language of the respective prepayment that some of these notes derives from the statutes. As applied to green briar. I've applied to green briar. Well, I think it was trying to make a general statement with respect to the relationship between the regulations that we've been talking about today and the notes took effect. But certainly, those people like the bio-forals and the other plaintiffs who have arguments with respect to the right to prepay, understood at the time they entered in what the regulations allowed. And read their notes to say if we stopped receiving these rent supplements which we were then receiving, we would be allowed to prepay. And indeed, that's what happened to the bio-forals. In December of 1987, they asked HUD to allow them to prepay because HUD had said to them if you stopped receiving the rent supplement contract and other of the 68 program, among other things, you will be allowed to prepay. So in December of 1987, they wrote to HUD. And HUD wrote back in January of 1988 saying we think the statutes could be changing, but right now it is true that we do allow owners to prepay their mortgages. And by the way, here are the steps that you must follow if you want to prepay your mortgage. So HUD had the same understanding with respect to the bio-forals that they were in early case because they had an early prepayment. But it's always true though, is it not that when you act in reliance on governmentally granted rights, whether it be by statute or regulation, you always act at risk because the government could change those statutes or regulations. Well, I think that the answer is pointed out that at the time they entered into the program, they knew what those regulations said. They knew what rights came along with it, came along with those notes. And at every point, up until this case, when the government raised this issue about the right to prepay, the government has consistently said that these notes, even if they don't specifically say that there's a right to prepay, the note has to be interpreted to allow for that. It's revisionist history, it's worse, but the government after that. One last question, can I real quick, I just want to make sure my count is right. I have six properties where there was a prohibition against prepayment in the mortgage. And that's really the only properties you're talking about right now. The other 15, all by my count, had a clause in the mortgage that expressly allowed the mortgage holder to prepay. That's right. I just want to make sure I have the numbers right. So you're talking only about the six properties that had the prohibition, the 15 properties, the others, all expressly indicated you were allowed to prepay at 20 years. The way I'm going to say this right now is, yes, the other 15 properties track the regulation, these six properties. I understand your point. There would be a discussion. The only point I'd make is that in his discussion this morning, the council of the government did indicate that in fact a leisure conclusion question. In fact, this is a taking case. That's what he made the distinction. He said, this is a taking case. The fourth certain case was not. It was a due process challenge. And I think that's totally consistent with the position that we have taken, which is that the. Okay. Well, I think that we can conclude the argument in chief and turn to the individual cases to the extent that there is something specific that distinguishes any of these selected cases from the others to make sure that we have it straight. Is there anything else that you think you need to add? Not with respect to the issues we have discussed already. There is some distinction between the, for example, in the terms of the decorations and the deposition testimony that was submitted for those plaintiffs on issues such as ripeness and so forth. We think that that's all set out in detail in the priest and I wouldn't say anything other than the testimony supports for these plaintiffs as much as it did for everyone else. The original conclusion that judge damage made, which was that those testimony that testimony was not conclusion in nature. It was fact based. We would say that whether you look at it as fact testimony or as lay opinion testimony in the case, it's admissible and it supports our conclusion that those owners did present evidence, which is the judge damage originally said. So you will rely on the priest for those distinction. Yes, sir. Thank you. Thank you. Is that all right with you, Mr. Arringt? We think that the priest should do talk about the distinction from cases from property to property from plaintiffs to plaintiffs. Okay. Well, thank you. Anything else you need to tell us? I think there's one final argument your owner that was made by the government in connection with a handful of properties, the delian property, the carriage house of the Schegin property and the carriage house health property. The allegation of the government was that was whether a lipa affected the regulatory taking because it expired before these properties could exercise their prepayment right. And again, this is a decision that was only raised in opposition, not by Crossfield. And they didn't address it at all. And they haven't addressed it here today at all. They have not addressed it. If the court is satisfied with the argument, I'll just say that we would disagree with that. Thank you. Thank you. Thank you.

I'm sorry, Your Honours. May I please come in? My name is Harry Kelly. I am the Council for the Appellants in this matter. Your honours, we do have, as you indicated, several different appellants before the record today and several different issues concerning them. I would like to begin my discussion this morning discussing the appeals that we filed on behalf of those parties who were dismissed below in connection with their claims about the ripeness of their claims. These parties are the Dalian and women's partnership, the Carriage House of the Skegan, Carriage House South, Thetford III, with respect to four of its properties, the Deanswood property, the Hardy Street property, Prison Court, the Holiday Town, and Thetford IV, with respect to the properties of Laundrive and Franklin Court. Your Honours, these cases, these accounts were dismissed on the grounds that they failed to demonstrate if they're taking claims for rip-throughedjudication. Now, both sides have filed motions for summary judgment on the issue of ripeness. So the issue turned out what proof each side submitted in support of its claims or an opposition to the other parties claims. What standard of review are we to apply to these ripeness determinations? It's a denotable. Aren't there underlying questions of fact? Well, there are, and they were examined by the lower court. So for that reason, I think that the lower court's analysis needs to be taken into consideration by this court in that process. There was a great deal of review and by the lower court, the lower court looked at these issues, frankly, for a couple of years before finally ruling on them. We have questions with the way in which judge damage resolved some of these issues. We think that as a legal matter, when we came forward with our proof, we offered what we considered to be admissible evidence, both for respect to the testimony of individual owners, all the owners, who had, in most instances, owned their properties for decades, and had operated their properties, and knew the markets quite well. In addition, we offered testimony from Mr. Smith, who was an expert very highly regarded in his field, who had assisted some of these opponents, some of the other plaintiffs in our case, in terms of preparing and submitting the various applications under the Preservation Statutes to the... But I guess my point is, since, and of course, the government has stood whether we should have been able to use expert testimony on a right-and-this issue, but since you did use expert testimony, if we find that was appropriate, don't we have to give some deferent to the lower court weighing of that expert testimony? Yes, Your Honor, but I think that the lower court acted in a manner which, with respect to that expert testimony, went beyond the scope of what it had the power to do in light of the evidence that was presented to it. The lower court did admit Mr. Smith's testimony as an expert. It concluded that Mr. Smith's testimony was valid as an expert based on his qualifications that we presented to the court. But then she concluded that the T-3 test was to expect this to crack. He said it was improving, Your Honor. And what we would say is that there was no doubt of air here by Judge Danichee. He basically divided up the report and said, I accept these conclusions, but I don't accept this other conclusion with respect to the way in which HUD processed these applications. I will say that Mr. Smith was intimately involved in filing of scores of applications under the preservation statutes. He knew the process very, very well. That was his chief experience with these statutes, with assisting people in making this undertaking. We presented his testimony and his qualifications with respect to that test three. We think we grounded him very, very clearly on the nature of what he had done. But the government offered no contract-rooting testimony. They didn't bring in their own expert. They made a number of allegations with respect to Mr. Smith. But they never attacked on a substantive basis the conclusions that Mr. Smith reached in that test three. So I think that the answer is that the court has to weigh the testimony, obviously, of an expert in use, make the best use of it. But for the judge, for Judge Danichee to conclude the test three was on proven and that was his language. Without conducting a doctor here and we think went beyond his powers. Please turn to the issues, the major issues of law. Well, as you said, when we were presenting these issues to the global court beginning with the right to this issue, we presented testimony from Mr. Smith that we just discussed. We also presented the testimony of our individual owners based on their many years of experience. None of the oldest testimony was contract-rooted. We presented declarations with the position of the testimony. And we believe that that testimony was correct when Judge Danichee looked at it the first time he concluded that it was not- But we're talking about right then. Judge Newman asked you to move on to some of the other issues? Well, in terms of weighing the evidence and so on, of course, we appreciate that this is significant. But we need first across the threshold question of the issues of law. Thank you. What I would say is that when- This is the group that we've been talking about, this is a panel that I just mentioned. These are the parties who actually appeal to this court on the issue of rightfulness. There are other appellants who did not appeal because they prevailed on the issue of rightfulness. We don't think those issues are properly before the court today because the government is not to begin with the not-final across appeal, which the courts rules require. The cross appeal rule is- It's pretty specific. It says you have to file a cross appeal if you want to change the judgment. Wouldn't the government alternative arguments leave the judgment of dismissal in place? Well, I think what the court has said here looking at the Luzar decision is that when a party has lost an argument and has not appealed it, where the result of acceptance of the argument would be reversal of modification of the judgment rather than affluence, the judgment with respect to rightfulness is that the claims of the bifurus and the other claims of Petra III and Petra Torre that would not put on appeal, so those parties claims were right. But those parties claims were all rejected either on collateral, a stop-al or the right to prepay argument. And so the judgment isn't a judgment on rightness. Rightness is an issue. That's not a judgment. The judgment is the dismissal and on the dismissal, I would have rejected the government's briefs as of cross appeal here, had they filed it and insisted that they don't get a yellow brief and a rebuttal brief, so they have to go back because they would not affect the judgment. So why don't you address the issue directly if you're so inclined? I'm very inclined to do that, Tron, because I think on the merit these people, these plaintiffs claims clearly were right. When we were before the court the last time, the court... We appreciate their right, but we still have to cross the substantive threshold of the right to prepay. We have a very contractual arrangements in relationship to the regulations. Thank you, Ron. There were four repellents that had to address the right to prepay and were filed on this grounds. Those were by a forest, the Dalian, the women of partnership. The Fetred Free, the women of partnership with respect to the market, Northern Holiday Town, and the Fetred Free, with respect to respect to the pre-trip. The issue here obviously, the government has raised it, did these parties have a right to prepay their mortgages. Our next argument, the government's argument is revisionist history of the worst sort, because the government is saying to the court directly the opposite of what it said internally during the relevant time period and to the public. We respect the rights of these no-charries. The court worked on regulations that issue expressly amendable. They were amendable, you know, and I'm not saying they never were amended. And we believe that the proper way to look at those regulations is that the notes that our party is sensitive into, derived from what the regulation said at the beginning of the program and continued to be in effect during the relevant time period. But if we accept your argument, I mean, you can see that the notes themselves and even the youth agreement with the government does not have any reference to a right to prepare. It doesn't, Your Honor, but I think that the important thing to understand. Actually, to be clear, you said it doesn't. It does. It says you do not have the right to prepay, right? You may not prepay. We do not disagree with the language of the note that you just read. But what I would say is this, and I think it's important distinction to bear in mind. If you look at the regulatory system that was established by HUD and by that regulation that was in place under which these notes are written, it created two alternatives. If you are a limited dividend entity and all of these opponents always plan to score a limited dividend entity. And you waited 20 years to prepay after the final enforcement date. And you were receiving rent supplement payments, you couldn't prepay. If you were not receiving those rent supplement payments and you were a limited dividend entity and you waited 20 years, you could prepay. There were two alternatives and only two alternatives created by HUD scheme. And HUD drafted these notes. There was not a third alternative. It was impossible. We said HUD drafted these notes. HUD didn't draft the mortgage notes. You and the mortgage lender drafted the mortgage notes for your client, right? They were in the forms of supplied by HUD. These were HUD documents. HUD's not a party to those notes. I have not a party to the note but it did sign the final enforcement agreement. Right, agreeing to provide the insurance. That's right. So I'm confused. You and the lender signed a note that said no right to prepay whenever. Despite the fact that there was a regulation that would have allowed you to create a mortgage that could be approved by HUD, that would allow for prepayment at 20 years. Right? This was the form that we did not create this form at the time the parties entered into it. This was not a form that the parties themselves drafted. There are other plaintiffs in here who had the right to prepayment in their mortgage notes. And so you could have done that all the time. I'll acknowledge, this is the form that was given to the parties to sign. There are several different variations of the notes over time that have been used. We're sanctioned by HUD. In fact, except for three, which is the same party, had some notes at the same time that had a right to prepay and some notes at the same time that didn't have a right to prepay expressly in the note. So it's not as though you could claim that they weren't on notice that a note could be written that included a prepayment option because that single party had notes going both ways for various properties that it owned. True, Your Honor, but I think it's also clear that under the regulations that those notes were issued under, the parties knew that the regulations wrote and the regulations wrote as written simply stated that if you were receiving rent supplement payments, you couldn't prepay. And if you weren't receiving rent supplement payments, you could repay. But under your argument, if we took it to a logical extreme, wouldn't it be true that any time of a private party entering into a business relationship in reliance on what regulations said could then argue this kind of taking every time the regulations were changed? Well, what is the clear on the regulations here? We're not changed. Well, the statutes were issues that overrode those regulations, right? That's the nature of the taking that occurred, Your Honor. But what we're saying is that when the biophoresis into their notes at a very early point, they knew what the regulations said. They knew the regulations said that if they were not receiving rent supplement payments, they were eligible to prepay. No, wait, no, this is the party. Don't understand. You keep saying that the regulations gave them a right to prepay and somehow that trumps the contract. I don't know where you got that from because the regulations that I'm reading 221.524, which does outline instances in which prepayment is possible, is under the heading eligible mortgages. And there are lots of different provisions like the one right after 221.524 says the mortgage may contain a late fee clause. So each of these provisions in this regulatory framework are things that the mortgage note is allowed to contain that would otherwise still make it eligible under the HUD program. It doesn't mean the mortgage has to. For example, more so than half to half, it says may contain a late fee clause. So HUD could approve a mortgage and it could satisfy HUD whether it had a late fee clause or didn't have a late fee clause. Why wouldn't I read the prepayment privileges section the same way? HUD is willing to approve mortgages that have prepayment clauses, as long as they need certain conditions. HUD is also willing to approve mortgages that have a no prepayment clause, but they're only going to approve the prepayment clauses if they meet the conditions articulated in 221.524. So why since the entire regulation is set out, listing the options that could be included in the contract, am I suddenly going to say every one of these options automatically has to apply to every contract? As I read this regulation here on what it's saying is that if you are an eligible contract, if you are coming into the program, the program will permit you to prepay without HUD consent if those three conditions in 524A are satisfied. Why? I don't understand why you read it that way as opposed to this is one of the conditions that is allowed to be written into eligible mortgages since every other condition surrounding it is such a condition. What I say is you're on it. If you look at what HUD said about this consistently over history, they agree with my interpretation. Well, that's important because certainly if the agency has expressed an interpretation of its own regulations, that interpretation is entitled to different. So where is it that the agency has interpreted this regulation as giving you a right to prepay even when you're mortgaged set to the contrary? Well, we would cite you back to two release resources of is the preamble from the 1991 libra regulations. Tell me where in the appendix I could find that or specifically because I thought you might point me to the proposed rule in the federal register. Yes, you're starting with a different place. So I don't have that one handy. No, that was the 1991 proposed rule. Well, that is what you're starting me with. Yes, you're right. Okay, I have that handy chair. And what we put in the language and I've read from what says there is that HUD was specifically aware at the time that it put out this regulation in 1991 that there was various and conflicting languages in the notes that it said in some instances, the notes actually say that you may repay without HUD consent and HUD at that time. That's not true. If the notes that you may prepare without our consent, we're not going to read the notes that way. Okay, now, if I agree with you and I think you have a strong case on what is actually written in 56 federal register 202-262 about what HUD is saying here, but an era statement made in a proposed rule that was never I can't figure out I couldn't figure out but I can't tell whether the rule was ever even adopted. And I know who what the actual rule was and we've done some looking. But so is that tantamount to HUD's definitive interpretation of this regulation such that that statement ought to be thought through position by the government, which is therefore entitled to defer? I believe it is your honor because HUD came back to that office of general counsel came back to the side of that provision several years later in the 1995 memorandum from the general counsel, which we've also provided before. It said the preamble and interim rules for Leclerc. Can you direct me in the J.A. to exactly where the general counsel is? I believe it's in J.A. I have a set for one handy. I only brought one because there's so much overlapping. And I think I have to buy a for reference here, which is 0.97 if I'm not mistaken. I think J.A. 95, my law purpose told me. Is that right, Cassius? 95? All right. Okay. Here's, this is, I got the opinion now. And in the 90. You're Mr. Price. This is the one. You're Mr. Price May 1st, 1995. I believe that's right. And there's an earlier one in 92 as well. But if I may, I think the 92 one is actually more specific and more useful here because. So J.A. 92 to 94. Okay. 90, J.A. 92 is the July 17, 1992 one. We will opinion. And that was wrestling with the specific question that these particular opponents face. Because these are these opponents began with a rent supplement contract. That was the, the, the, the, the, the, the, the, the applied, before the Section of Programs adopted. HUD persuaded the biophores and the other parties to terminate the rent supplement contract in the end of the Section 8 contract. And at that time, the General Counsel specifically addressed the situation that these particular plaintiffs faced. Where rent supplement owner converted Section 8 assistance. And the court said, and I'm sorry, the Office of General Counsel said, if the rent supplement is converted Section 8 assistance, the project would no longer be considered a rent supplement project. Would no longer be considered a rent supplement contract. In other words, it was moving from that first basket that I just wrote a few moments ago to the other basket. And would not be subject to the prepayment prohibitions in Section 2215 24 into 3630. Rather, a limited dividend distribution mortgage or which is not receiving rent supplement assistance would be permitted to prepay its mortgage without a consent after 20 years of the data file endorsement. So I think the 92 General Counsel member, random, is saying make the distinction that I may. If you were not receiving rent supplement, you moved from the basket of people who could have prepay to the basket of those who could. And there was no third alternative. Okay. So I completely understand your argument now. And I think it's a very good argument. The one question I have for you is how does this regulatory is stowed benefit the right to prepay which you expressly don't have in your contract? Your contractual rights has no prepayment. So the federal government has come along in whatever benevolence it has and decided to nonetheless allow you under certain limited circumstances to go ahead and prepay. How does that turn into a contractual right that you have a vested property right? Because I think what, especially the General Counsel's office was saying in 1992 is not that we're conferring something new on people. This is a right that was latent from the moment that they entered into these contractual arrangements. The regulatory system that was set up by HUD and under which these notes were derived and executed by HUD when it finally endorsed them. That system allowed for only the two options that were approved. But I thought that can't be right because all these contracts expressly say to the contrary and they were contemporaneous. So these contracts were under this scheme and yet HUD, you said provided you with the clauses for the contracts and the HUD clauses said no prepayment. So it can't be the case that HUD had as an agency decided there were only two instances prepay under these conditions or prepay under these conditions. Because they were providing you with contracts that said no prepayment. So it can't be a reasonable interpretation that they believe prepayment could never be prohibited. Well, but that's what these excerpts that we've located and we asked the government to provide us with evidence or documents discussing this right. And we found these materials and what these materials you uniformly said. And it's manifest that when HUD was looking at these issues, they were looking at the contracts. They were trying to figure out what the rights of these people were and they were not saying that we are giving these people something different than what they had at the beginning. In 1992, the Office of General Counsel made it very clear we are confirming what the rights of these parties are pursuant to these notes. And if the note doesn't conform to what we established, the note must yield to the interpretation which we are providing to you today. And I think the best evidence of this is given in the biofores. Well, but I'm having trouble with that impression of yours that I don't understand HUD to be rendering an interpretation of what you meant at J.A. 190 when you said the note may never be prepaid and you signed that document. I understand them to be saying as they did in the federal register site you pointed me to, if there is a conflict between the note and the reg, the reg will supersede the prepayment prohibition and the mortgage note. So they acknowledge that the contractual right has a prohibition and they are saying the regulation is going to supersede it. The word supersede means come after, right? I mean it has a natural meaning in the English language. So if they are saying, they are not saying I'm interpreting the contract is never having allowed it. They are saying we are going to replace that term and have you instead followed the regulation which gives you a benefit that you didn't previously have. Well, I think that if you put the various statements that the agency has made together, I read the agency as in fact saying that if you look at the system that was put in place, these notes don't exist independently. They came from the program that was established, the 220-win program, the Section 230's program, to carry out a mission. How it created, how it took the statute of the depower, drafted regulations to put into effect and then issued regulatory agreements and the formal notes in order to carry out its mission by obtaining the participation. I think that this is another direction. I don't think that anybody has argued that HUD could not enact a regulation which somehow affected or changed the contractual relationships, the fall of the fall of the lender and the end-hut. The question, the legal question, isn't it? Whether in so doing, this was a taking of a right which had been previously vested. As to how it was previously vested, we can consider. But if in fact it was previously vested, we agree that I could say no you can't do it. Was this a taking or not? Isn't that what this case is about? Yes, that's right. In our view is that when they entered into these notes, all of the amounts entered into these notes with the understanding that when so long as they were receiving supplement payments, they could not exercise a right to prepare. They didn't have that right. I thought the extremely complex question is you and Judge Moore have been discussing is whether in fact a right was previously invested between the various contracts and regulations and whether a regulation can override a contract in order to divest a right previously vested. As I said, I think that our view is not that something new was created in 1991 when the lipper regulation came out or in 1992 or in 1995 when the Office of General Counsel explained what was happening. What in 1992 the Office of General Counsel did was essentially to say that for those people like these opponents who were persuaded to leave their own supplement program and come into the Section 8 program, what happened at that point was that they were able to move from the basket of people who at the time, at the beginning of this program, were not allowed to free pay into the basket of those who were. That right was latent at any point for anybody. So long as they weren't receiving the right supplement payments, they were eligible to pay. I don't think anyone debate that these property owners were sort of sandbags by the government a little bit. The government encouraged them, the government told them they were going to be able to do this. But the question is, does that become a contractual right? Did those regulations create a contract between you and the government or is it a contract between you and the note holder that is abrogated? That's the difficulty here because they can have regulations that induce you to do certain things and then ultimately change those regulations or Congress can by statute override those regulations. And I think that the answer is, that when the program was founded, this right was built into all of the notes that were issued by HUD. What HUD was saying in 1992 and 1995 when it looked at this is that everybody in this program had a right to free pay after 20 years without a consent. If they were a limited dividend mortgage or and we're not receiving that supplement payment. So who is the contract with? Well, the actual terms of, I think that this court was seeing in your garden's case originally said that the contract was between the mortgage and the mortgage or HUD endorsed that. So the contractual agreement was between those parties. But as I said, these notes were prepared by HUD. They were the offspring of HUD. And HUD is the party who is clearly in the best position in terms of being able to say what the rights were that these notes conferred at the time they were created. Can I ask you something about the general counsel's opinion in particular. The one that you're citing to us that you're saying establishes unequivocally the belief that there was an overriding, contractual right to free pay sort of throughout. The paragraph you read to us at the bottom of 93, the very end of that paragraph continues and says, liffer requires in order for housing to be deemed eligible to income. There must not only be the right to free pay without HUD's consent, but this right must have existed by regulation or contract which was in effect prior to February 5th of 1988. So isn't this general counsel's opinion actually recognizing that you don't automatically have a right that the right has to have existed in the contract itself for it to arise? I have always said that language learners confirming our position because our position is that this is a latent right that was built in to all of the contracts. And what HUD was doing these later. Then why did you sign a contract and said expressly the opposite? Because that was the one that was provided to us at the time. If you look at the there are many other, obviously many other plaintiffs in the N.I. and Gardens case now below. Many of them have language that follows tracks very closely this particular regulation. This one does not admit that. But it would be very difficult for me to understand the situation where these contracts that were signed pursuant to the same program under the same regulations that offered exactly the same set of rights and benefits by participating in the Section 221 or Section 236 program would be deemed somehow truncated right that everybody else participated in the program had pursuant to the terms of the regulations that led to the drafting of the regulations. And I would say that this is a very important thing to do with these notes because then you end up with parties who are like everybody else, except for the fact that the time they entered into this contract at the very early point. They were receiving rent supplement assistance of those contracts and ended in notes that so long as you're getting the assistance, you can't pre-pay. It is the language of the 1995 letter at J-97 stronger than the language of the 1992 letter. I'm not sure why you believe the 92 letter is more powerful for you. Well, I'll accept the court's view of which is more persuasive. I simply think that the 92 document is useful because of the dressing in the particular situation that we're facing here. The other number 91 statement is extremely broad. And it says, if a note says that you can prepare without our consent, you can't pre-pay. It also says that you can't pre-pay because, you know, it's a factor right because of the time you were getting rent supplement assistance. If it says you can't pre-pay and you're not receiving that rentable assistance, you can pre-pay. Do you agree? I'm just trying to understand how your argument is founded. I mean, we're having this argument about whether there was a contractual right because I think that we're all probably on the same page, but I want to make sure that if the government simply bestows a right by regulation and then changes the regulation and takes it the right away, that that isn't in the circumstance of taking. I mean, if you didn't have a right, you unequivocally had no right to something and the government comes along and creates a right to say welfare. You are not a welfare recipient. You've never been a welfare recipient, but there's a welfare program that you could be eligible for that would otherwise exist. The government has bestowed it as a benefit on people, and then the government by regulation takes the program away. Suddenly, you're in a situation where you would have benefited from that program to continue to exist. You don't have a vested property right under that circumstance to claim the government didn't have the right to take that program away, right? You agree. So we're in agreement that if the government be so deregulation, the government changes that regulation. That doesn't give you a basis for a taking. The branch and the white case address those things. You would agree with that, right? That's right, Jonathan. I understand your arguments. I just want to make sure that we're all talking about the same thing. That's right. That's why the contract portion is so important to you. Why it's a contract? Exactly. We think that that contract stems from the regulation. That contract embodied those rights in a latent manner to come back later. There are several other issues that need to be discussed, such as the issue of inclusion matter, with respect to the Fed for four. It was my understanding that court was going to allocate certain time to on a case by case basis certain property specific matters. I was planning to discuss that during those sessions, but if you'd like me to get into the issue of inclusion matter. I think we appreciate that this fundamental question, depending on how it's answered, will affect all of the other issues. No. The issue of inclusion matter only. Your Honor, only addresses the Fed for four because it alone was the sole party to a prior litigation. Right to prepay only addresses some and collateral stop all the addresses others. In fact, the only one that is in both is Stuart's Creek one. I have a candy candy chart. My law is prepared. It is property by property, issue by issue. I think we should all compare our charts, Your Honor, but I think we've all got the similar charts like that. But the issue of inclusion case applies to all the Fed for four. Do all the Fed for four because all of the Fed for was the party. But interestingly, and this is the part that surprised me, and my wrong about that, the earlier court circuit case only Southgate. So of the one, two, three, four, five, six, seven, eight, nine, ten, eleven separate properties that composed set for four. With eleven separate mortgages and eleven separate sets of circumstances, only one of them Southgate was that issue in the four circuit decision. And I'll be right about that factually. I believe that is correct, Your Honor. I think that that was the only one that was there. So that how can collateral stop will apply when our court has clearly indicated that every one of these things has to be taken case by case because the circumstances of a mortgage can be different. The circumstances of the geography where the property is located can be different. Your future plans for the property can be different. So when our court has said that every one of these has to be done case by case, how can collateral stop will which didn't address all but one of the properties for four circuit opinion? How can that be resolving the same issue? That's our problem as well, Your Honor. Because the rules are that for collateral stop will apply. The legal and factual issues must be identical and they are not. There's no overlap with the court indicated. Is there some tension here between the arguments that you make on the statute of limitations issue? It's doing that we get to it. The argument that you're making here under the statute of limitations issue, you argue that the fact that there are different properties doesn't really matter because it's really, you know, a centralized question that relates to the petitioner or the plaintiff. I think what we said with respect to the central limitations issue is that in all circumstances the federal plaintiffs were alleging the same basic injury that they're taking and a pursuit of the statute. So on the one hand, the basic claim is the same for all of those properties, but the proof of how that taking arises and the evidence that is necessary to demonstrate is extremely fact specific. As the court has I think indicated on numerous occasions any regulatory taking claims of very ad hoc factual discussion. So we think under rule 50 and C it's very clear that those claims with respect to the federal properties that were brought in at a specifically amended later. Clearly, I'm excused. Clearly relate back to the original complaint because that complaint laid out the nature of the allegations that were being made and the impact that this statute had on this plaintiff, or the plaintiff. And that effort is one of the three and that before I believe in the only two plaintiffs from the early from the lower case that had multiple properties. Okay. And then in the fourth circuit, your challenge there was an as applied to, I mean, not a facial challenge as opposed to an as applied fact. Exactly. The correct way around it. The cases were very different. In the federal for case, which was decided in 1990, it was a direct attack on due process attack on the lipa at the time. Libra had not been enacted at the time of the federal court decision. So the only challenge that we could make was with respect to the ellipis statute. And it was simply a broad facial attack on that, whereas pursuant to what the court told us to do when the issue to decision of this case in 2006. The issues now for the lower court are as applied regulatory takings claims, which are fraught with numerous factual and property specific issues that are necessary in order to show that kind of a thing. And I know I'm moving backwards here, speaking of things that court sort of told you how to do. I try to understand why Mr. Smith did not use the analysis that was sort of endorsed in Tiana Gattu for his rightness. In other words, he won in T2 analyses. Don't seem to mirror the statutory requirement as tightly as we contemplated in Tiana Gattu. We thought, you're on that when we looked at the approach that Mr. Smith was taking, it had a very strong mathematical objective measures of what using the methodology that had itself it developed to determine who could and who could not prepare. I don't think there's any one way to do this. I do think it's interesting. I think in his original, I'm sorry, in the motion of the order on reconsideration, I believe that Judge Damage said that he felt that Mr. Smith had provided information that was akin to or similar to him in respect, the information that had been brought forward in the seating of Gardens case. And the methodologies that he used gave us a degree of mathematical precision. You were either in or you were out according to Mr. Smith's analysis. And all of this just so that I understand is going only to the administrative exhaustion point, right? The Smith one and two and the validity thereof is simply going to whether or not you should have had to play this out before HUD, before coming to district court after being rejected or prepayment or whether you should be allowed to go straight to district court. Am I right? That's right. This isn't on the merits of whether you have satisfied a taking. No, no. Simply on whether or not you have a right to get your foot into the courtroom at this point. That's exactly right, Your Honor. It's one makes you understand the context. Certainly. This is a case that's been obviously taken sometimes to get to the decision we are now proceeding. We're taking discovery for a group of plaintiffs in the lower court. But all of this was in order to do what the court asked us to do to come forward with fact-based property specific detailed information explaining why these plaintiffs could not satisfy the very strict standards for the statute provided as the court said in the scene. If you don't satisfy those mathematical requirements, you cannot. HUD cannot allow prepayment. And what Mr. Smith's test did. We felt was test one test two was to allow the court to assess on a very detailed and methodologically correct basis. Whether those properties could in fact repay their work. So your point is that what we said in get a good two is that you have to prove certain things and you're just saying that we didn't stick to a methodology for those. I think that's what very correct, very true your honor as a judge damage felt that Mr. Smith had come up with the test one that was very strikingly can. I think it's a language to what wasn't seen. But I would also say that I don't think the proceeding of court established or limited the specific nature of the proof that the party need to come forward with in order to satisfy those standards. Your last issue is that limitations. I know you addressed that to some extent already. But aside from your cross appeal argument. How do we is there any difference that we are to give to a lower court determination of relations back or is this a purely legal and no? I believe that this kind of a decision because of the book. I still think that the court this is clearly reviewable of the court. But the fact findings that the specific facts that were found by the court in support of the statute of limitations is a jurisdiction issue in the court of federal claims are minus standing are reviewable and clear error and judge judge damage did find. I'm sorry. It was really just we need at the time. It did make a certain number of very specific findings found that that for three had been plaintiffs since 1993 that that for three certain regulatory taking claims for their properties based on lip or at the time. No new claims or theories of liabilities were added by the inclusion of the additional properties. And the amendment only identified all the three properties encompassed by the existing regulatory taking claim. I see what I'm already on my. Let's hear from the government on these issues and we can go back to the particulars as appropriate. Thank you. Thank you. It's a guarantee. May I please the court before the court are as applied regulatory taking claims brought by the owners of 21 moderate and low income housing projects. The owners alleged that libra affected the taking of a contract right to prepay their mortgages with a private lender. Two owners, Carichasse South and Carichasse Muskegan also alleged that a libra affected such a taking. Now these claims fail for several reasons. First and foremost, the taking claim of all of the plaintiffs as to all their properties are not right. In addition, the mortgage notes for six particular properties do not contain the contract right that was allegedly taken by the United States. Issue of inclusion bars the claims are started by setford for as to their properties and claims about ten properties owned by setford three and setford four are barred by the statute of limitations or at least they would be barred by the statute of limitations if those claims were right. Can we start with issues for accruing? Gladly. Because I think this is one that we can dig into quickly. Isn't there a distinction between an as applied challenge and facial challenge? In the taking context there certainly is. So in this particular case what the fourth circuit considered is whether there was any possibility that any property could ever qualify. And they said that the kit proved futility because we can't say as a matter of law that that's the case. But they didn't decide that these particular plaintiffs would never be able to make an adequate challenge. I don't think that's by right. The setford four decision was it was not a taking case. It was a due process challenge. And the plaintiffs said we don't need to go to HUD to assert a due process challenge as to us. It wasn't simply everybody it was as to them. Well, of course you have to say that as to me but their argument as to why that was so was because they said because no one could ever qualify. No, they didn't say that no one could ever qualify. If you look at the decision they say that we couldn't have qualified. And that's what the court talks about. The court talks about it. They raised four different arguments as to due process as to why the district courts dismissal of their two process claims were improper. One of them is that you don't have to exhaust administrative remedies when you're making a constitutional challenge. One of them was that you don't have to exhaust administrative remedies because as to us, exhausting administrative remedies would be futile. The fourth circuit. Why? I didn't see them making the arguments that they make here at all about futility. So how, I mean the fourth circuit you can recognize you're completely unsubstantiated, generalized argument about futility isn't going to ever cross the hurdle. So what I don't understand them having made the argument before the fourth circuit because they're making here today which is these precise properties would never have been approved for prepayment by HUD on the basis of their historic record of refusing to prepay because the only properties at issue in the collateral stop all are all ones that satisfy Smith one or two. These are not ones that hinge on just Smith three which judge damage found valid one or two. So I understand them saying these properties are properties which we can establish legitimately, I know you don't agree with that, but legitimately can establish our entitled would never be approved by HUD and therefore it will be futile. I don't understand that to be the argument that they made in the fourth circuit. I've looked at all the briefings all the way back to the district court. That's not the argument they made there. Well, I think you need to go back to and we're now getting into futility honestly, your honor and what is standard for addressing futility? Well, we're getting into futility because you've prevailed on collateral stop all in the collateral stop all with space entirely on futility. It seems that we have to actually since collateral stop all requires that the identical issue having been resolved below, you have to look at what was the issue that was in fact resolved below, right? And the issue as that was resolved below in set for four was did the property owned by that before they were dealing with a specific property. They were dealing with Southgate as one of your honors mentioned during Mr. Kelly's argument. They were specifically focusing. That was that was the claim that that was the property that set for four put forth in that litigation. So I'm going to ask you two questions. Sorry to interrupt you. But since none of the other properties at issue in this litigation, what even add issue in the fourth circuit decision, how the heck can we have collateral stop all because we've made it clear, you've got to have property specific case by case, mortgage analysis. So for everything other than Southgate, how could we conclude that a decision rendered in the fourth circuit about what might have been futile with regard to Southgate? Was or wasn't futile with regard to all of the properties not considered in that decision? How could that create collateral stop all? I think that it doesn't create collateral stop all your honor because what you have to address in looking at exhaustion is whether or not the fundamental question is not whether or not as to a particular property, would or would not approve a propanement. The fundamental question is could have approved payment if the administrative process had been exhausted. 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And so if your argument were right, we couldn't have a health utility in those cases and allow those cases. I think you're talking principally about what we've referred to as the Sianic-2 decision year. But you also have to recognize the green-ribe decision in an earlier case in which the court held exactly that. But they're both our job because those are both panel decisions to attempt to reconcile the situation. And if you're arguing that you can never show futility, then you're actually saying that the Sianic-2 just got it wrong, right? You're on a...that is not my argument. I think that what Sianic-2 did was the same thing that the Supreme Court did in its pseudom decision. It said that based on what happened in this case, there is no dispute as to four model plaintiffs and only as to four model plaintiffs. There were more than 40 plaintiffs in the case. As to the four, it may have been 38. But there were...as to those four model plaintiffs, there's no dispute that HUD would not have allowed them to free-pack. Right. And we allowed all the other plaintiffs to go back and to establish the levels of proof that might be necessary for them to prove the same thing. The court allowed them to go back. That is correct. It's also important to recognize what this court did though in the prior decision in this case and how the court handled Sianic-2 and how the court handled Greenbrier in the decision in this case. The prior Anaheim Gardens decision, the court looked at the proceedings. It was analyzing this case as a motion to dismiss under Rho 12b6. And it found in the pleadings allegations of administrative delay. It said at page 1315 of that decision that unlike the plaintiffs in Greenbrier, the plaintiffs have said that they applied for relief under LEPRAP, but that HUD has so severely delayed in meeting its requisite deadlines under the statute that they have as a result missed their own statutory deadlines. It said that a plaintiff claimed that it filed a notice of intent and should have received a preservation capital needs assessment within a certain period of time and mentioned other allegations of administrative delay. And then this is key. It said because a taking claim based on administrative delay could be right without final decisions from HUD on prepayment, the court reversed and remanded it. It said we reverse and ran for the development facts on whether a policy taking claims are right. That's at 1317. And I think what the exact language for you said because a pelt have begun the application process, but have run into delays or are missing information on the value of their project because of HUD delays or refusal to provide the requisite appraisals and PCNAs, their claims if proven may fall into the administrative utility category and be right without final decisions. I think I'm not really understanding your argument. I understand what you're saying, but I'm not understanding how it's responsive to whether or not today can argue before us futility which wasn't decided by the fourth circuit, which is the collateral of stoppage points. So tell me how the argument you just made about whether there could ever be a temporary taking by virtue of administrative delay, which I consider quite frankly to be a separate and unrelated point. Tell me how you're justifying the collateral stoppage holding by the fourth, in this case, these would be the fourth circuit on the basis of that language about a temporary taking claim. We've it together, so we're not getting it. And I was talking about futility generally around or not so much collateral stoppage, but my understanding of the fourth circuit's decision is that the fourth circuit said as a general rule where there is a discretionary administrative process as here that exhaustion of that administrative process is required. And exhaustion of the administrative process as to theft or for will not be excused because of futility. That's my understanding of what the fourth circuit did in theft or for. They said that the failure to exhaust. If that's how broad the holding was, then that would be inconsistent with the anarchist who had anti-Hankardons. Would it not? No, it is not. It is not admit. It is not inconsistent with the anarchist who, because the anarchist who, as to the model plaintiffs, simply applied the bedrock proposition is if there's no dispute between the parties. And the United States did not argue that the fact established at a prior breach of contract trial meant that there was a possibility of repainment. We did not claim that there was a possibility of repainment as to the form model plaintiffs. It was an undisputed proposition as to form model plaintiffs that they couldn't repain in the case of. Suppose that HUD has discretion to grant prepayment and that a thousand different people have applied with identical circumstances. And HUD has denied every single one of them consistently the right to prepayment, even though they could have within their discretion allowed prepayment in those instances, but HUD has really pretty clearly and categorically rejected prepayment under their discretion for people who have certain types of criteria. So now the thousand and one person comes along with the identical facts. This is not our case. Don't worry. I'm not trying to understand what it is. But the thousand and one person comes along. Technically, HUD does have the discretion. It would be awfully hard. It seems to me for them to grant that discretion in light of number one thousand and one given that they rejected it for the first thousand. But theoretically, they have the discretion. Is that a circumstance in which futility could ever exist to allow the thousand and one person to give the administrative process and go straight to district court or would your position, which seems to be, whenever there is discretion, you can never have futility. Your position would seem at its no furthest point to trump futility even in that clear case. So I want to know where exactly you are. Your honor, our position is that you would have to exhaust there. And I would point you to the Corus Stahl decision of this court. It wasn't quite as extreme as the hypothetical you just gave me. But in Corus Stahl, this court rejected the argument that an agency's position in other matters establishes futility. And it said that. It said, if you are seeking relief and this applies to you, you have to go and you have to convince the agencies that they've done it wrong in the other cases. As I said, it's not as extreme as the hypothetical you gave me. But it did talk about rejecting futility in the case where a plaintiff argued that the agency's position in other matters showed that they couldn't prevail in that case. And the court said, no, you must exhaust. How do you resolve, how do you deal with the fact that there is some inconsistency between the arguments that you're making on the statute of limitations and the arguments that you're making here with respect to issue profusion because you responded to Judge Moreen said, it doesn't matter that all those properties weren't before the fourth circuit because it's just really one big issue and it's all the same. And with respect to statute limitations, you're saying, well, it's not really one big issue. We need every set of property has to satisfy the statute of limitations. Well, as to the statute of limitations, Your Honor, we're talking about rightness here. As to the statute of limitations, you're looking about the underlying transaction and you really are getting into a merit sort of analysis, which is somewhat different than what we're talking about purely on the rightness issue. The terms of rule 15C of the Court of Federal Planes ask whether or not the same transaction or occurrence, I'm paraphrasing the language, but whether the same transaction and occurrence are at issue in all of the claims. And when you look at that and you look at the merits of these claims, not whether or not the claims are right, the rightness aspect of it is very similar. Because you do have to apply to pre-pay. But the merits of the claims, when you start looking at the pencentral factors and you start looking at economic impact, you start looking at investment, best expectations, those things are all very different. Because you are dealing with different properties, you are dealing with different town and cities, you are dealing with properties that were developed at different times with distinct mortgages and with their own preservation history. Although frankly, the preservation history is similar in that none of the plaintiffs here did see code permission to pre-pay. So that aspect at least is similar. They went different routes as far as seeking benefits under the statute, which virtually all of them did see kind of the statute. With respect, you didn't eagreze any of these issues to the red briefs. So obviously we didn't know if that's limitations or the attack on key one and two or even other issues. So what is your response to the argument with respect to the fact that you should have cross appeal? Well, as to the cross appeal, Your Honor, it is exactly what was discussed earlier. This court has said that it's improper for the United States to file a cross appeal where we are not seeking to change the judgment. The judgment here as to all of these plaintiffs that are before the court today is a judgment of dismissal. And we are simply providing alternative grounds for affirming that dismissal. This is how you say that none of these plaintiffs in any of these cases sought permission to pre-pay. That's correct, Your Honor. Not a single one. Okay. So as to your cross appeal, your question, Your Honor, the law on the circuit is clear about when a cross appeal is appropriate and frankly when a cross appeal is not appropriate. And for instance, in Bailey versus our container corporation, this court said it is only necessary and appropriate to file a cross appeal when a party seeks to enlarge its own rights under the judgment which we are not attempting to do. Or to lessen the rights that it's adversary and the judgment, which we are also not seeking to do, we simply seek to affirm the dismissal. And so we are not allowed to cross appeal. Going to the right-and-the-s issue, which we believe cuts across all of the cases here, the fundamental question is what could have happened if the administrative process had been exhausted, not what would have happened. Where there's some possibility of obtaining permission to conduct the activity at issue, exhaustion of the administrative process is necessary. And some possibility exists whenever the agency has a discretionary standard. There's no question that we are dealing with the discretionary standard here. Both Alipa and Lepre say that HUD may approve a request to pre-pay and under both statutes HUD was directed to assess whether implementation of the owner's plan, and that's important if the owner's plan that is being submitted, would materially increase economic hardship on current tenants, they had to consider whether or not the availability of comparable and affordable housing, a discretionary judgment, was available if the owner's plan soft to displace tenants, and HUD was to evaluate whether implementation of the owner's plan would materially affect the availability of affordable housing in the area that the plan is properly could reasonably be expected to serve. Again, discretionary lines. I think that though, and Janneke, too, that the statutory language does not provide pure discretion, that there are limits in the statute on the exercise of discretion, so it's not a circumstance where that would fall within the bounds of the other cases upon which the government relies, whether it's pure discretion given in the statute. I think it's important to recognize the context in which the court was talking about discretion. In Janneke, too, talking about the model plaintiffs, the court said the party agreed that HUD would not allow pre-payment under the statutory standard. What we said in Janneke, too, is that you have to look to the statute, and the statute found the discretion. So, to the extent that the discretion is limited, then HUD can't act. So that's why the court said that there was certain facts that could establish utility because the fact would say that under the statute HUD would have zero discretion. There's an important argument that was not presented in Janneke, too, that I want to mention to the court, and it's an argument that the United States did not make in Janneke, too. Because you're talking about implementation of the owner's plan of action, the owner is able to craft a plan of action that can satisfy the statutory criteria. Not all plans that the owner could submit would be disapproved. Now, the court in Janneke, too, was talking about a plan of action where the owner went in and was going to immediately raise rents on current tenants by more than 10%. But the fact that they could craft a plan that HUD would approve is not the same thing as them having to do it. They could say, yeah, but we wanted high-income condos. The fact that we could have created a plan that you would have ultimately approved is irrelevant because that's not what we intended to do. If you look at what the Supreme Court has said on this subject, in the McDonald's case, in Williamson County, in other cases where the Supreme Court has been talking about exhaustion and futility, the Supreme Court has said that where a project owner goes in and says, I want to build 200 houses on this plot of land, and they are rejected. They've actually applied and they're rejected. Unless the record establishes that they couldn't have built 100 houses on that plot of land, they still have to apply a second time in Palazolo for instance. That doesn't answer my question because my question was, suppose such a record here was clear that they wanted to put up high-income, high big, expensive condos, million dollar plus condos a piece. That is clearly something HUD would not have had the discretion to approve because it would have absolutely modified dramatically the availability of low-income housing in the area because none of the current tenants would have been able to stay. So if that was their plan, and if theoretically they have a right to do whatever they want with their property after 20 years, I don't understand how the fact that they could have put in moderate housing, maybe I don't understand how that affects the futility analysis that we're discussing. It affects it because the fundamental thing that the Supreme Court has said that you have to do in exhausting is have the responsible agency establish what uses of the property would be allowed. Now, you are postulating a plan that HUD would have denied. There can be plans that would be denied and plans that would be accepted under a discretionary standard. And you have to, by applying to the agency, get a final decision that tells that establishes how you can use the problem. So what your suggestion is an iterative process where the property owner is going to spend the entire rest of the mortgage period going in incremental steps trying to get what it wants out of HUD and being rejected time. And again, that can't possibly be put to Supreme Court contemplated when you're talking about a fixed-term mortgage like this because what you're saying is they're going to commit a stand putting up all high-income housing, HUD's going to reject. Okay, darn it. I'm going to put up 50% high-income housing, HUD's going to reject. It can have about 49%, 38%, 72%. Where can we go? So the onus is on them to keep applying until you finally say yes, and then we know where the boundaries are. And only then can they go to court to complain about the fact they couldn't do what they wanted to do to begin with? No, Your Honor. And I would point you to the Palozolo decision. I would point you to the Pec decision in this court. And the Maguire decision in this court. In Palozolo, the owner did in fact have to apply twice. Before the Supreme Court said we have established how this property can be used and you don't have to apply a third time. In this court's HECC decision, the court said the, and I think I can give you a pretty close quote, that the futilities take exception simply serves to protect the property owner from being required to submit multiple applications when the matter in which the first application was denied makes it clear that no project will be approved. So if you apply and you learn from that application process where the bounds are under HECC, under Palozolo, under Maguire, you don't have to apply second time. Why does it matter where the bounds are if the bounds are anywhere other than where you want them to be? When you have a property right that has been taken, who the HECC cares what they would let you do and not let you do, if you can't do what you want to do? Because to establish the taking of your honor, when you get to the mayor. Now that's just damages, that's not futility. I don't see how that is relevant to futility. I see how it's absolutely relevant to damages, right? Because well they wouldn't give you everything you wanted but they would have actually given you 90% of what you wanted. So I totally see how that is relevant evidence. I just don't see how it's relevant to the point of futility. The reason it's relevant on liability or honor and not simply to what just compensation is, is because under Penn Central you have to evaluate the economic impact among other factors to establish whether a taking has occurred at all. It could be that HUD said you can't for your pay your mortgage at all. And in fact this court has affirmed cases where HUD has said you cannot pre-pay your mortgage at all but it is not a taking. And it is not a taking because looking at economic impact, looking at investment-backed expectations, looking at the character of the government actions, there's no taking. But once again I understand completely how that goes to liability and the merit just like it could also go to damages both both. But I don't understand how it goes to futility because you can absolutely bring all of that out in the course of the actual proceeding. But the bottom line is it's still totally futile for them to go through the application process at HUD because they can't get what they want. And then they want to argue that by not being able to have what they wanted an unfettered property right to do with their property whatever they wish that there's been a taking. Now you and them can both bring out all of these facts in deciding whether on the merits there's been a taking but I don't understand how that impedes their ability to get into court. But that's exactly what happened in cases like Williamson County and McDonald's, your honor, where the court says that submission of a grandiose plan that is denied does not necessarily make your claim right. Now it can underhept under palazolo if the submission of that grandiose plan goes in and it establishes the parameters of the use of the property. What is it Williamson County? It's just the Supreme Court opinion. It is. And actually use the word grandiose. I believe it does. Who wrote that? I'm sorry you're right. I don't remember who the majority of things were written by. Can we shift to the prepayment obligations to payment issue? You know you're reference to 10 central set of those are regulatory cases. They don't have to do with the contractual thing. And I understand the government's arguments but the one thing that I found kind of compelling was that the government doesn't really explain why it kept saying repeatedly, repeatedly, that it doesn't matter what the mortgage notes say. So deal with the 1995 letter. Let me explain that. And I think we have a question in our brief that touches on this. Yes. That's a little. That's for me is always a red flag when someone just dropped it in a footnote and it's a pretty bad fact. Well, it's not because it's a bad fact. It's because it's collateral to the issue. But what liproset is that you can proceed under this statute. If you are what was defined as eligible low income housing and that's what's discussed in these letters. What is eligible low income housing? And lipric defined the term as project developed under section 221D3 or 236 that quote under regulation or contract in effect before February 5, 1988 is or will become within 24 months eligible for prepayment without the program. So that's the level of the secretary. The key language there is under regulation or contract. You will allow to proceed under lipra if HUD's pretty 1988 regulations would have allowed it or if your contract would have allowed it. And so even when you didn't have a contract that had the right in it. If under HUD's regulations superseding that contract language, you would have proceeded. You're allowed to proceed to get the benefits in lipra. And that's what's talked about in these letters is are you eligible to proceed under lipra to get the benefits that these statutes provided. And these properties that had no contract right to prepay are still allowed to proceed under lipra because of earlier regulations. Regulations that were expressly subject to change but nowhere at no time did they have a contract right. And that's what's key for the taking plan here, your honor is that the property interest that's alleged is a contract right to prepay. And in that is in the case at least as do six projects, other projects did have in their mortgage notes the ability to prepay after 20 years. But as to six properties, they had no such contract right. And HUD regulations didn't change that. It was either in the contract, there's plain language in the contract that didn't confer it, it was either there or it's not an as do. But regulations didn't change that what do we make of the federal register site for the proposed rule where it actually says the regulation will trump the mortgage note even if the mortgage note says you can't prepay. Before before lipra was enacted before a lipa was enacted HUD it construed its regulations as preempting contract language. And so if under HUD regulations you could prepay the regulations would give you that right. The problem is that if you are basing your taking claim on a right in regulations that are law that are expressly subject to change, your taking claim fails. The reason it fails is this court's decisions in let me get the name to write firm was one of the decisions. And I think that I think that the closing counsel pretty much indicated he understood the same which is why he was pinching it on a contract. But why then if there was some generalized understanding at the time these contracts were entered into that you had this right through regulation it would trump anything in the language of the statute. Would that be enough? No, because it's the contract right it is allegedly taken. And here we've got contracts with clear language. At the beginning and end of contract interpretation where there's clear and ambiguous language in that line. I didn't look at all six do all six of the contracts that issue have an actual prohibition I looked at at least two and they had actual prohibitions no prepayment short of 40 years no prepayment period do all six of them have that clause. Five of the six of them have that you can never make this easy on me. I'm sorry the sixth contract. Which one is the sixth? Do you remember which one it is? I do not all have my head. It was neither farthinian nor milwood. Dollary and Stewart. And it was not dolly and it was one of the others. One of the thefts for one. I believe so. Well, it has to be because the only three left. That contract was not found but we had an admission in the record that it did not contain the right to prepay. So we don't have the actual document but we have an admission in the record. The admission that it didn't have a right to prepay or admission that it expressly prohibit a pre-present. You see the difference I'm drawing. The difference I'm drawing is between a contract which absolutely prohibits certain pre-payment and a contract which is otherwise silent where the regulations could be deemed. I understand the distinction you're making here your honor but in this particular case the distinction is without a difference. And the reason is that all of the contracts expressly addressed pre-payment. And so if it didn't expressly say you could prepay it expressly said you couldn't prepay. So because it was actually addressed in the contracts, if there's a concession then it didn't contain the right. You pointed out that the regulations were expressly amendable but they were never amended. They were amended once Lipra and Alipa came into force your honor because HUD issued new regulations talking about when you couldn't prepay what you had to do to apply to prepay. So the language in those regulations what was required the statutes changed it first of all. And after the statutes changed it also issued regulations that modified things as well. So would it be your argument that the 1992 and 1995 letters interpreting the regulations become meaningless at that point or it was a language that was being addressed by the Assistant General Counsel still the same? Well first of all the language in the statute had not changed at that time. That could be directly answered your question. That said we're not talking about interpretation of the statute in regulations where you might get Chevron difference here. We're talking about a letter about one specific property for instance in the 1995 letter not that is not one of these particular properties at all. So yes there is that letter from HUD to that owner about that property but I think we need to be careful in saying that one letter on one occasion is a proper way to interpret the statute and the regulations across the board. But the language at J-A-97 is very broad. It is not saying and on your particular facts this is what happens. It says therefore despite language in a note prohibiting prepayments the project mortars will become eligible for prepayment without prior HUD consent. So it says despite language in the note prohibiting prepayment. And I believe that is talking about the old HUD regulations around right after looking at the language but that is how HUD interpreted its regulations before a letter. And that's a question. Did the language that he was addressing, the precise language that he was addressing change? HUD implemented new regulations your honor in 1992. In March 1992 to which he pointed I know they're new tell me what about them is new is this analysis completely wiped out by the change or did the change leave in place the very specific part that he was discussing? No because the change made it so that you then had to apply to HUD to prepay. The new regulations required an application to HUD to prepay. You couldn't do it unilaterally the way the 1970 regulations allowed. So the prior I didn't understand this or appreciate it by the fact the prior regulations didn't allow unilaterally prepayment. It was only the new regulations that came along and for the first time suggested that in order to prepay you have to apply. The new regulations in 1992 implemented the statutory language in Libra and required an application. But it was applied was it not after 20 years or in terms of the particular contractual arrangements that have been established for the prior law? I'm sorry. The perception of the title aid change was that in part it was intended to liberalize the eventual prepayment possibilities in view of change circumstances. The new language allowed HUD discretion to allow an owner to prepay even after the requirement to apply existed. I'd like to with the rest of my time talk about this. Before you move on. Just one last thing. We're talking about whether or not these council letters and possibly the statement and the proposed rule of our registered statement created an understanding about what the regulations allow. What I didn't hear you say and I want to make sure I understand your argument though is that all of that is irrelevant to whether there is a contractual right. I just want to make sure I understand your argument and I haven't missed it. Yes, that is absolutely correct. Even if he is 100% right about what the 92 and 95 letters indicate what HUD will do under its regulations. Even if everything, I guess I kind of don't know why you're fighting them so much. And you're spending some time fighting them that it's distracting from your true point which I think is even if he's 100% right on the proposed rule and both council letters, they're still only a regulatory based property right at best and not a contract based. And if I've distracted from that, I apologize or I don't know that is exactly our point is that it has to be a contract right because that's a bit of a ledge and you don't have a right in the regulation. Can we go back to rightness for a second? Yes. One of the things that the CFC found on reconsideration is that the government never made any specific attacks on any one of the Smith and T.1, T.2, or T.3. The government simply took the broad base approach that they could never under any test prove futility. And the CFC found that that was inconsistent with our analysis in T.1, T.2. And so that's in because there have been no attack on Smith's methodology otherwise or on the propriety of how those tests match up with 41 away or with T.1, T.1, T.2, that they decided to enter some rejection. So why is it and you still have a draft test at all? And that was exactly what I wanted to go to, Your Honor, and allow me to do that. And the court is wrong that we did not address. I thought that's an event like that. No, please, please, please, please, please, it's an important issue. Thank you, Your Honor. The court is wrong that we did not address that. We submitted declarations from Kevin East, these are in his declarations are in the joint appendix and from Morris Berry. Mr. East was the head of HUD's preservation division during the 1990s. Mr. Barry handled a portfolio of about 20, excuse me, of about 40 HUD projects and was personally responsible for processing under the preservation statutes. In their declarations, they talked specifically about Mr. Smith's tests, one, tests two, and tests three. They talked about all of them. And as to test one, Mr. Smith's first test, he created an affordable areas list. And his proposition was that if a project was not in one of these affordable areas, HUD would have denied prepayment. Such a prohibition is contrary to the express language of the statute where it says that HUD will set implementation of the owner's plan on an individualized basis. And the affordable areas, Mr. Barry and Mr. East both said, quote, the affordable areas list was not used in evaluating requests to prepay pursuits of the preservation statutes. And they went on. They said projects located in metropolitan areas that were not on the affordable areas list remained potential candidates for prepayment. Directly contrary to Mr. Smith's so-called test, we have testimony from two HUD individuals, sworn affidavits, that say his preferred test is simply flat out wrong. And it's more problematic still because Mr. Smith's test doesn't track the terms of the statutory provision that showed what HUD had to analyze in terms of a plan of action. The Section 4108 of Lippa, Section 225 of Alipa said nothing about an affordable areas test. And so nothing in the statutory language spoke to this test number one. And we have two HUD officials submitting declaration saying that this test does not show that a project couldn't prepay. Mr. Smith's second test has much the same problem that Mr. East and Mr. Barry spoke to this test. The second test sought to evaluate whether the rental market containing the plan is properly was soft. As the term soft was used in HUD's interim guidance for the so-called windfall profit test. How do you deal with the fact that these decorations were before the court and the court actually looked at them and said, I think these are weak and I give them very little weight. Well, your honor, first of all, because we are dealing with summary judgment, if we are actually dealing with what HUD would have done, we don't think that's the correct inquiry. We think it should be what HUD could have done. But if we're dealing with what HUD would have done at a summary judgment stage, the court is supposed to give all reasonable accept credibility and accept reasonable inferences from these declarations. Now, these declarations at a minimum show that simply adopting Mr. Smith's test is inappropriate on a motion for summary judgment. We have declarations conferverting his test and his approach. And so at a summary judgment motion, that shouldn't win the day. If what we're really talking about is what HUD would have done. The second test has the same problems in that Mr. Smith looked to see what was a soft market. And he opines that HUD would have denied an owner's plan of action if the rental market was not soft. But Mr. Smith and Mr. Barry explained that the windfall profits test was not a proxy for prepayment and that HUD could approve prepayment irrespective of whether a project passed or failed the windfall profits test. Moreover, and the court found this, Mr. Smith disregarded nine of the ten factors that HUD's regulations said you have to look at in evaluating whether a project was in an area that was soft. Ignored nine of the ten factors that HUD's regulations said you had to look at. And the trial court acknowledged that failing. We'll help you get out of the chair right right on this. And would you enlarge the security time by the time we run over for reputtle? We raise the new wishes. Thank you again, Your Honor. I would like to address some of the discussions that the court had with Mr. Harrington. I think one of the things that comes out of this discussion is the fact that notwithstanding Mr. Harrington's arguments, it was important and the government should have used the opportunity to file a cross appeal on the rightness issue and the statute of limitations issue, both of which came up pursuant to their opposition memoranda, their opposition briefs and not directly for the court. Mr. Harrington mentioned one of the authorities here which said that the cross appeals are not required except in those cases when a party is attempting to expand its rights under a judgment. That's clearly what the government's attempting to do here. If the court, for example, concludes that the theft of the four appellents claims are not precluded as a result of the prior decision by the fourth circuit, that party, there were certain number of different issues there. Presumably, if we prevail on our claims that we have brought challenging issue preclusion and so forth, that's what four would go back to presumably to be remanded into the court of federal claims. So, to pursue its taking claims because it's taking claims were deemed to be right by the lower court. So, for the government to say that it's not attempting to expand what it had before is clearly erroneous. It is attempting to put itself in a better position. It can't win twice. They won one's on one ground. They can't win twice. If we allowed that to have any idea what a nightmare it would be here in our court every single time there would be a cross appeal in every case because they didn't like something that would have made them win for a different reason than the one they actually won for. That's not the rule of how you decide what is a proper cross appeal and what is not. It would be a disaster for our court if it were. My point, Your Honor, is that the lower court has ruled in favor of the other claimants on their right and this claim. The government is attempting to subvert essentially the decision for all those other claimants who are proceeding on their take this claim in the lower court by challenging these claims of these appellants here without having properly raised this on a cross appeal. They are not allowed to raise this on a cross appeal. We just struck it and sent it back. So they have a right to raise it here. Now I understand it might well affect the ones that are continuing below. I get it but it's not on the basis of they couldn't have raised this on a cross appeal. We wouldn't have allowed it. Well, I think that the other point to bear in mind with respect to this is that the government is challenging. I don't think there's anywhere around it. I think the government is challenging this court's prior conclusions in the senior gardens case with respect to what constitutes futility for purposes of the right this determination. There's been a lot of discussion about that but it's clear that in senior gardens this court looked at very diligently and very discreetly looked at the issues of rightness and what these statutes required to do in order to satisfy futility standard year. In doing so the court stated that the test had changed and that in order to bring a claim there were very strict standards in the statute that must be satisfied before I could exercise any discretion. And that is clearly not what Mr. Harrington is what the government is arguing before you today. He wants to make an argument that something else should be the standard of this court should follow. He wants to argue that apparently some initial filing must be undertaken before futility determination can remain. That is not the holding of this court made in the same garden that's not the direction that we had when we were sent back to the court of federal claims once before on this matter. So the court, the government is making a direct act on CNEGA in the CC Associates case before this court that decision was reaffirmed that the understanding of futility was reaffirmed and we don't see any basis for the court to adopt any of a ruling here. It's very clear that unless the statute, the very strict mathematical statutes standards of these statutes are satisfied, HUD can't do anything. And cases such as the head case of the government sites are really about what happens. If you make the first application, what that, the impact that might be on subsequent applications indeed. I think the head case is really a question about what constitutes the final decision on one application for purposes of understanding the impact that might have on later decisions. But it doesn't, in any respect, deal with the situation of creating an alternative rule. But to be extent that the government is claiming that we had to do something else at this point. I think this government should continue to subvert with this course of CNEGA. But their underlying argument is that test 1 and test 2 by Smith don't demonstrate that HUD would not have approved pre-payment on these loans because they don't follow the regulatory standards that HUD was using to decide whether pre-payment was appropriate. Like, how do you respond to their argument that on the soft market point, Mr. Smith's test 2 only addressed one of the 9 or 10 that don't remember the exact number of criteria that HUD would have itself evaluated in assessing the impact of that standard? The question you're on is that there were multiple reasons why HUD would have found that an owner couldn't pre-pay. There were 10 different factors. As Mr. Smith's analysis says, all we had to find was one reason why they couldn't pre-pay. And if we, if we could demonstrate that the owner couldn't satisfy that one reason we didn't need to worry about all the factors. That his factors, the 10 factors are not, you know, of not things to be weighed and balanced, but it means you have to satisfy all the 10. I know what I'm saying that. Or it's fail anyone. It's failed anyone. That's all it took to pass the test. And that is correct. That's what the HUD regulation was saying. The, we thought profit test was an attempt to determine if there were any properties that might be applying for incentives, which they would not be entitled to because they were allowed to pre-pay. And Mr. Smith's approach, I think, is elegant and breathtakingly simple. If it was a test that was intended to be used to sort those properties that should not receive incentives because they could be paid. It could, the same method of looked logical structures, the same wickries could be applied to determine those properties, which could not be paid. And as I said, I think the judge looked at those tests in great detail. He did accept Mr. Smith's test and money, his expertise. He kept it in his full defeat as an expert. And I think under the circumstances analysis about test one and test two are fine. The government indicated that it argued that it brought forth declaration testimony from Mr. East and Mr. Berry. As the court indicated, Judge Damage did not accept those opinions. And we had rejected Mr. East's testimony because the government did not put Mr. East on the list of those people who were going to be who had knowledge on this. And then we didn't have an opportunity to pose him before his declaration was received. But if you look at the declaration, as the lower court found its principles are, we think essentially in a positive, there's a lot of discussion about what might have happened, what could have happened. If somebody, somewhere sometime at some point had come forward with an application that allowed for treatment. But in terms of understanding or attacking the evidence that was submitted for any of these specific elements or any of the plaintiffs, we respect to what we offered those reports of those declarations. I'm still having trouble with these fundamental issues. We're talking about taking the possibilities at a due time, if it's agreed, that there is a taking that one looks at investment back expectations and all of the other bases on which compensation would be grounded. And yet the government says that not one of these plaintiffs' petitions requested permission to prepay. How would this one reconcile all of this? Well, because your honor, if Congress wanted to allow our owners to prepay. But the regulations say that with permission, it isn't that this is a surprise. It's in the mortgages, it's in the trust documents. And the regulations, you did not find them, refer to authorization. The regulations that were in place for honor, that we are tying, for example, in connection with the rights of repay, that argument, all say that you may repay without HUD's consent. After 20 years, or in terms of the under the mortgage terms? That's right. And what happened when Congress enacted this statute is it imposed these extraordinarily strict criteria to say that if you wanted to prepay after the enactment of ELIPA and later with LIPA, if you wanted to prepay, you had to satisfy these incredibly strict criteria. And you needed permission. And that one. I would tell that not one of these plaintiffs requested permission after those enactments. They did not your honor for the reasons that were stated in the declarations and the deposition testimony that we submitted in support of our motion for some adjustment. They, the owners, who, as I said, had been owned the property of many instances for decades, knew the property, knew the market, and also knew what the regulations and the statutes, the preservation statutes required. They came forward with it that we couldn't meet these standards. We were unable to do so because the standards required us to prove that was we could not prove. They required us to prove that there would be no adverse impact on the market if we were allowed to prepay our mortgage. And that's what we asked Mr. Smith to do, which you'd come up with a test that would allow us to evaluate, allow the court in a methodologically sound, and we think rigorous manner to come forward with evidence to demonstrate that you could not prepay. And for all of the plaintiffs, except for the handful whose claims we're looking at today on the right misissues, for all of the handful, Mr. Smith concluded that those plaintiffs, on the test-1 and test-2, could not in fact satisfy the statutory requirements of prepayment. So that's why the owners didn't do, didn't come forward to the ages. He did not ask to prepay because they knew that in order to do so, the government would be required to essentially ignore the requirements in the statute. And indeed, that's what this court said in C&AGA in 2001 that those statutes were extraordinarily strict and HUD had no discretion. But it couldn't do anything if you couldn't satisfy those regulatory, sorry, they couldn't satisfy the threshold requirements of the statute imposed to allow an owner to prepay. It's not surprising that the owner's reached this conclusion. There were thousands of properties in the United States that were covered by the Section 221 statute in Section 236. Only a handful of them, I think, that are very diligent efforts have identified only seven properties, not whole portfolio, that actually succeeded in prepayment, and perhaps less than a score of properties even asked to do so. And why? The reason is that the owners knew that they were not going to be allowed to prepay. Again, because if Congress wanted to let people prepay, they could have just stood by and not enacted the statute. But these statutes were enacted for a reason, and the reason was to prevent people from prepaying their mortgage. If you were already subject to an agreement that prepayment is prohibited for 40 years, why would this make any difference to these owners? The owners, in most instances, with the limited exception of the handful of plaintiffs who are arguing about their right to prepay, their contracts said that they could prepay in 20 years. Yes, well, looking at the exception. Yes. But I would also say, again, you're on a, that if you look at the regulations at the time under which these notes were drafted, and remember that this court and green briar made the point that the prepayment terms in these mortgage notes were derived from the high price. So this court is already tied the language of these notes to the regulations pursued to which they were drafted. And that's not an unusual thing in programs that involve the statutory programs that are implemented by an agency that have been carried out through the government of the private sector through various forms of contracts. The green briar case has already concluded that the language of the respective prepayment that some of these notes derives from the statutes. As applied to green briar. I've applied to green briar. Well, I think it was trying to make a general statement with respect to the relationship between the regulations that we've been talking about today and the notes took effect. But certainly, those people like the bio-forals and the other plaintiffs who have arguments with respect to the right to prepay, understood at the time they entered in what the regulations allowed. And read their notes to say if we stopped receiving these rent supplements which we were then receiving, we would be allowed to prepay. And indeed, that's what happened to the bio-forals. In December of 1987, they asked HUD to allow them to prepay because HUD had said to them if you stopped receiving the rent supplement contract and other of the 68 program, among other things, you will be allowed to prepay. So in December of 1987, they wrote to HUD. And HUD wrote back in January of 1988 saying we think the statutes could be changing, but right now it is true that we do allow owners to prepay their mortgages. And by the way, here are the steps that you must follow if you want to prepay your mortgage. So HUD had the same understanding with respect to the bio-forals that they were in early case because they had an early prepayment. But it's always true though, is it not that when you act in reliance on governmentally granted rights, whether it be by statute or regulation, you always act at risk because the government could change those statutes or regulations. Well, I think that the answer is pointed out that at the time they entered into the program, they knew what those regulations said. They knew what rights came along with it, came along with those notes. And at every point, up until this case, when the government raised this issue about the right to prepay, the government has consistently said that these notes, even if they don't specifically say that there's a right to prepay, the note has to be interpreted to allow for that. It's revisionist history, it's worse, but the government after that. One last question, can I real quick, I just want to make sure my count is right. I have six properties where there was a prohibition against prepayment in the mortgage. And that's really the only properties you're talking about right now. The other 15, all by my count, had a clause in the mortgage that expressly allowed the mortgage holder to prepay. That's right. I just want to make sure I have the numbers right. So you're talking only about the six properties that had the prohibition, the 15 properties, the others, all expressly indicated you were allowed to prepay at 20 years. The way I'm going to say this right now is, yes, the other 15 properties track the regulation, these six properties. I understand your point. There would be a discussion. The only point I'd make is that in his discussion this morning, the council of the government did indicate that in fact a leisure conclusion question. In fact, this is a taking case. That's what he made the distinction. He said, this is a taking case. The fourth certain case was not. It was a due process challenge. And I think that's totally consistent with the position that we have taken, which is that the. Okay. Well, I think that we can conclude the argument in chief and turn to the individual cases to the extent that there is something specific that distinguishes any of these selected cases from the others to make sure that we have it straight. Is there anything else that you think you need to add? Not with respect to the issues we have discussed already. There is some distinction between the, for example, in the terms of the decorations and the deposition testimony that was submitted for those plaintiffs on issues such as ripeness and so forth. We think that that's all set out in detail in the priest and I wouldn't say anything other than the testimony supports for these plaintiffs as much as it did for everyone else. The original conclusion that judge damage made, which was that those testimony that testimony was not conclusion in nature. It was fact based. We would say that whether you look at it as fact testimony or as lay opinion testimony in the case, it's admissible and it supports our conclusion that those owners did present evidence, which is the judge damage originally said. So you will rely on the priest for those distinction. Yes, sir. Thank you. Thank you. Is that all right with you, Mr. Arringt? We think that the priest should do talk about the distinction from cases from property to property from plaintiffs to plaintiffs. Okay. Well, thank you. Anything else you need to tell us? I think there's one final argument your owner that was made by the government in connection with a handful of properties, the delian property, the carriage house of the Schegin property and the carriage house health property. The allegation of the government was that was whether a lipa affected the regulatory taking because it expired before these properties could exercise their prepayment right. And again, this is a decision that was only raised in opposition, not by Crossfield. And they didn't address it at all. And they haven't addressed it here today at all. They have not addressed it. If the court is satisfied with the argument, I'll just say that we would disagree with that. Thank you. Thank you. Thank you